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This series will contain essays by 
representative scholars and men of 
affairs dealing with the various phases 
of the moral law in its bearing on 
business life under the new economic 
order, first delivered at the University 
of California on the Weinstock Founda- 







NOTES 121 



A LITTLE more than two thousand years ago 
there lived in widely separated cities near 
the shores of the Mediterranean two men 
who did not know of each other's existence 
nor even, in all likelihood, of the existence 
of each other's country. One was the 
Roman, Marcus Porcius Cato, whom we 
know as Cato the Censor. The other was 
a Jew, Jesus (or possibly Simon), the son 
of Sira, whose book by a series of accidents 
has come to be called "The Church Book" 
Ecclesiasticus. Cato was something of 
a parvenu, of slight intellectual cultivation, 
a first-rate soldier, a competent statesman, 
brutal, red-haired, and painfully stingy. 


Ben Sira was a gentleman and a scholar, 
indifferent to politics and averse to war. 
Both were austere in their morals and a 
little difficult, perhaps, in social intercourse. 
Further, they had both a shrewd common 
sense and a disinclination to be hoodwinked. 
And they also had in common a distrust of 
commerce and a poor opinion of merchants. 

"A merchant/' said Cato, "may, I do not 
doubt, display a laudable energy in the pur- 
suit of gain, but he does so at considerable 
risk to his fortunes. " J 

Ben Sira is even more direct: "A mer- 
chant shall hardly keep himself from wrong- 
doing and a huckster shall not be acquitted 
of sin/' 2 

These men represent, in widely differing 
societies, an ancient and inveterate attitude 
toward trade. Wealth was desirable and 
its accumulation praiseworthy, but its proper 
source was war or husbandry. To obtain 
it by buying and selling merchandise was 
not in itself harmful or ignoble, but it was 


fraught with danger. Wealth so procured 
was in the first place unstable. It came 
easily and might go easily. And secondly 
there was the double opportunity of fraud 
and oppression, once when the merchant 
got his wares and once when he disposed of 
them. He might have given less for them 
than he should and he might be taking more 
for them than he ought. 

All this rests upon a notion that there is 
an amount which he should have given or 
taken, and if we follow this notion to its 
source, we shall discover that it really ex- 
cludes trade altogether as a means of honor- 
ably acquiring wealth. Two things seem ex- 
tremely likely in the history of Mediter- 
ranean commerce: one is that barter from 
which sale sprang was originally conceived 
of as an exchange of gifts between friends, 
and the second that systematic and profes- 
sional barter was at first confined to for- 
eigners. 3 Foreign commerce again was not 
essentially different from freebooting, and 


to have argosies at sea did not usually mean 
that the Argonauts intended to pay for the 
golden fleece when they had found it. 

The converse of this is, of course, that 
foreign merchants in any community were 
under suspicion of being no better than 
they could help. The only security against 
direct plunder was the danger of reprisals, 
and, when commerce became a settled cus- 
tom, the need of returning to the same 
source of profit year after year. 

The business of merchandising, therefore, 
began with a handicap. In the villages of 
Palestine it was represented by a Canaanite 
huckster, 4 a man who feared not God, and 
by a Sidonian ship in the ports of Hellenic 
cities, manned by bearded Syrians who scud- 
ded away before one could repent of a bar- 
gain. 5 That the Greeks quickly learned the 
lesson and bettered it, and that it was in 
this enhanced form that it got to the Ro- 
mans, made it only the more evident to 
both peoples how profit was made by trade. 6 


Further, we must remember that the basic 
transaction was barter, and that barter in 
its origin seems to have been an interchange 
of gifts. Such an interchange between 
friends ought to be equal. We remember 
ho.w Glaucus and Diomede exchanged shields 
in the Iliad and how Diomede ruefully dis- 
covered that he had given gold for brass, 
a hundred-oxen shield for a nine-oxen one. 7 
It was a sort of overreaching to get more 
than you gave, and evidently if we get only 
what we give, that is not a good way to 
make a profit out of the transaction. 

This attitude early made way for a more 
rational one. But its effect has lasted, and 
it reappeared in full force in medieval 
Europe, where the position of the Church 
in the matter was an amalgam of philosophi- 
cal contempt of wealth and Christian re- 
pugnance to the vanities of a transitory 

But it may be well to keep in mind that 
contempt of commerce was not so general 


in the ancient world as it is often made to 
appear. 8 Both Ben Sira and Cato called 
attention to the dangers incident to com- 
merce. That it was in itself objectionable, 
they do not say, and as far as the Greeks 
were concerned, the attitude of Plato and 
Aristotle, which is directly hostile to com- 
merce, is a highly personal one. It is a re- 
flection of the official attitude of that Spartan 
state which gave more than one element in 
a sublimated form to Plato's ideal Republic. 
For the majority of Greeks, philosophers, 
statesmen, soldiers, poets, and artists, quite 
as much as for ordinary burgesses, commerce 
was as natural as dining and almost as com- 
mon. 9 We do, to be sure, hear of the wide 
chasm between merchants proper, e/rTropoi 
and hucksters, /oxTnjXot, and we are not in- 
frequently told what an unsavory lot of 
rogues the latter were. That is to say, it is 
often pointed out that big business and little 
business are different things, and that lying, 
cheating, and cringing, which make any 


occupation contemptible, are to be found 
chiefly in the latter. 10 

It is too bad that our information comes 
from the big business men and their friends 
and that the hucksters have left no literary 
spokesman. But it is likely enough that 
the description is substantially true. The 
market-place is not the nurse of manners, 
and those who must compete for small gains 
in order to make a poor living are apt to 
exhibit their sordid anxieties a little more 
openly than gentlemen should. Perhaps, 
too, the eagerness of sharp wits to rub against 
each other, which found its highest expres- 
sion in Colonnade and Garden and Porch 
and Grove, was deflected into that delight 
in haggling almost for its own sake 
which is not rare in the Mediterranean." 

But in the upper reaches of business, 
where one dealt with consignments and 
cargoes, with granaries and factors, a man 
could keep his integrity, his dignity and his 
profits, all at the same time. Merchants 


would not be admitted to citizenship in 
Aristotle's properly conducted polity and 
barely to residence within Plato's ideal 
city. 12 They were none the worse in fact 
for this exclusion, inasmuch as these wisest 
of wise men were never seriously considered 
in the constitution of states, although found- 
ing cities was the favorite occupation of men 
in the centuries after Aristotle. 13 

In those cities, as in almost all others, 
merchants were welcomed, and out of mer- 
chant states, like Rhodes and Carthage, 
empires grew which were absorbed into the 
Roman system with a profound influence on 
the minds of the new masters of the world. 

None the less, exclusion from an ideal is 
not a negligible punishment. Plato and 
Aristotle were not the intellectual gods of 
the Roman Empire, any more than they had 
been in Hellenistic Greece. In the economic 
organization of the Empire, commerce was 
a vital factor, and the law of the Empire had 
a great deal to say even of cabbage-dealers 


in the truck-markets. Cicero is very clear 
on the honorable vocation of men who do 
business on a large scale, and even the mawk- 
ish Seneca professes no aristocratic or philo- 
sophical scorn of profitable commerce. 14 

But when the Roman system broke and 
a new system gradually emerged in the West, 
it was dominated, first, by men who were 
committed to a theory which made of riches 
in this world something worse in the next 
world than poverty, and later, by men who 
found in Aristotle and Plato the philosophic 
basis of this religious dogma. It is true that 
even here a place was found for the great 
merchants who carried the plenty of one land 
to supply the want of another. From these 
men and the silk- and wool-clad lords of the 
Hansa, one descended precipitously to the 
peddlars and mongers at the outskirts of 
fairs. And in the Middle Ages as in the early 
Renaissance, there was abundant illustration 
of cities whose merchants were princes, whose 
traffickers were the honorable of the earth. 


Indeed, it was often enough the case the 
princes were merchants. Cosmo dei Medici 
made his counting-house a palace, but 
Edward IV and Henry VII, as well as other 
Renaissance despots, did not scruple to make 
their palaces counting-houses. 

Still there was a better and a worse in all 
this. It remained a little better to inherit 
wealth than to acquire it, and if it must be 
acquired, it was more gentlemanly to do so 
as Cato and Ben Sira thought it should be 
done, by the bounty of a luxuriant soil and 
the multiplication of fruitful cattle. There 
was a deeply ingrained belief that there must 
be a short and a long end to every bargain, 
and that the one who got the short end on 
one occasion must be consoled by the hope 
of the long end on the next. People might 
acquiesce in this, but the morality it implied 
was consciously accepted as a lower level of 
conduct. One did not expect merchants any 
more than lawyers to exhibit unmistakable 
signs of grace. It has often been pointedly 


remarked that extremely few lawyers suc- 
ceeded in becoming saints without renounc- 
ing the law, but apparently there were still 
fewer merchants. 

Another element of modern business, 
speculation, or the discounting of future 
changes, had to raise itself from a still lower 
depth. To buy goods in the hope that they 
will rise in value, indeed, to buy them in 
order to resell them at all, 15 forestalling and 
"regrating" were for a long time deemed a 
peculiarly wicked and cruel type of fraud. 16 
In many parts of Europe it is only in rela- 
tively recent times that these things have 
ceased to be crimes. 17 

Accordingly, in ancient society and in 
medieval society, merchandising proper 
might be reputable, and for a time honor- 
able but speculation was quite disreputa- 
ble. The change made by the Renaissance 
and the Reformation was that commerce 
became highly honorable and speculation at 
least ceased to be dishonorable. But not 


even in modern society have we been able to 
rid ourselves completely of the feeling that 
the scale of moral values applied in business 
must necessarily be in the lower registers. 
The angels, it may be, live perpetually in 
the region above the treble clef. Business 
men do well if they do not sink below the 



WHAT men thought of merchants and com- 
merce was one thing. What their legal 
agencies were willing to do about it was 

The ineffectiveness of the law is one of the 
most widely discussed of modern topics. 
So much of this discussion as spills over into 
the newspapers and the too public utter- 
ances of semi-public men does not seem to 
be excessively intelligent. Apparently the 
difficulty that is found with the law is that 
it has not succeeded in making men love 
their neighbors as themselves. It is quite 
true that law has not done so. And if the law 
ever attempted it, it would deserve to be 
characterized as Mr. Bumble the Beadle did, 
when he said that the law was a hass. 

Law and morality and a few other things 
were at one time identical. That is to say, 


the same persons were required to determine 
what was legal, moral, mannerly, pious, 
customary, and proper. A severance was 
ultimately made in most of these things, and 
for several of them a special social mechanism 
was devised which in a short time became an 
institution in its own right. But the sever- 
ance was never complete, and at various 
times and in various places, attempts have 
been made at a reintegration. They were 
always without permanent effect except so 
far as they produced a certain confusion. 
Lawyers were never quite certain as to how 
much morality was expected of them and lay- 
men could not know surely to what extent 
the law would apply moral judgments. 

It is currently supposed that law is always 
a little behind general morality and that the 
changes in moral estimates as recorded by 
courts must necessarily follow after an ap- 
preciable interval those recorded in practice. 
That is an error. The morality applied by 
courts of law is sometimes in advance of that 


generally held, and sometimes behind it. As 
striking examples of the former, we may 
instance the witchcraft trials, in which 
judges for two generations labored, and gen- 
erally in vain, to save the accused from the 
ferocity of juries; 1 and the fact that at the 
present time our criminal statutes are far 
above the crude vindictiveness shown by 
even educated laymen in cases which stimu- 
late their imagination. On the other hand, 
in other fields of law, courts will enforce 
bargains which public opinion reproves, and 
will often distribute losses or fail to do so in 
a way definitely at variance with the best 
popular notions on the subject. 

The tendency of a social mechanism to 
develop values of its own is a well-known 
phenomenon. The association between mor- 
als and law was always sufficiently close so 
that a marked divergence between the values 
so created and independently developing 
moral values seemed an evil which needed 
a remedy. Western systems of law sought 


to establish the required corrective in the 
moral sense of the administrator, provided 
that the administrator was not himself 
altogether a specialized functionary of the 
legal system. That was nowhere so syste- 
matically done as in England in the Court 
of Chancery, where the King in his chief 
adviser's person administered a law different 
from that of his ordinary courts. It was gen- 
erally a supplementary law, one which was 
infused with a kind of legal morality ; that is, 
a morality which would satisfy the robust 
conscience of an honest Englishman, though 
it might leave less satisfied the tenderer 
consciences of anxious precisians. The 
growth of this Chancery law or Equity, its 
stimulation in the eighteenth century by the 
doctrines of reason and natural law, its pro- 
found influence on the law of the Common 
Benches, the almost successful attempt of 
nineteenth-century Chancellors like Eldon 
to harden it into machinery, all that is a fas- 
cinating story which cannot be detailed here. 


The history of Roman equity was quite 
different. Before the Roman political system 
had reached its final form, Equity had offi- 
cially absorbed the specialized Civil Law, 
and the legislation of Justinian takes it for 
granted that a divergence between a legal 
and a moral judgment will be extremely rare 
and will invite the special attention of the 
judge. When medieval Christian Europe 
developed a new law into which Church law, 
local customs, and the Byzantine Code of 
the Roman law entered in varying propor- 
tions, the same assumption was theoretically 
made. But under the baleful influence of 
feudalism, legal administration became the 
privilege of a caste or something like it, and 
the rather stilted Equity of the books be- 
came in practice a rhetorical embellishment 
of procedural tangles. It was not till the 
revolutionary movements at the end of the 
eighteenth century that a new direction was 
given to Continental law, which ended in an 
effective recognition of the principle that a 


legal result which is at variance with pre- 
vailing morality may be ultimately defensi- 
ble, but very urgently needs defense. 

Systems of Equity are not quite enough 
for the moralist and not quite enough for 
popular feeling. 2 It has turned out that 
Equity borrows something of the stiffness of 
the other branch of the law in the very act of 
softening it. It is this stiffness that makes 
the complete system, composed of both law 
and equity, partially independent of ethical 
developments in other social agencies and 
inclined to determine for itself how far it 
will accept values which arc in the course of 
getting themselves established elsewhere. 

This is nowhere better illustrated than in 
the relation of the law to the changing atti- 
tudes toward mercantile practices. Certain 
of these practices were judged bad by the 
moral guides of the community. Did the law 
assist these guides or hinder them? Or did it 
merely offer an additional and scarcely neces- 
sary confirmation to a determination fully 


arrived at and completely executed by the 
consensus of society? 

In asking and answering these questions, 
I shall in the main confine myself to our 
own law the law, that is, of the Anglo- 
American system. Parallels enough could be 
found in contemporary European develop- 
ments, and for much that we have, the im- 
pulse came from abroad and often the devel- 
oped institution as well, corpus cum causa. 
But we shall have enough to do in sketching 
the intricate pattern that law and morals 
have traced in our own system, and we shall 
have occasion to glance elsewhere only for 
fuller illustration. 

Against commerce it has been charged 
that its purpose is greed and its methods 
cruelty and disloyalty; that its end is pride, 
the destruction of the soul and the decay 
of the commonwealth. These are grievous 
things, and in the year 1569 Thomas Wilson, 
Doctour of the Civil Lawes and one of the 
Masters of'Her Majestie's honourable cotirte 


of requestes, said because of one single mer- 
cantile practice, " I do verely beleve the end 
of thys worlde is nyghe at hand/* 3 

Although the business of merchants is 
buying and selling, they did not invent buy- 
ing and selling nor did they invent credit. 
And merchants as creditors took over meth- 
ods and processes developed by those very 
landowners and stockraisers who were prone 
to regard merchandising as evil and danger- 
ous. The processes were hard and cruel on 
debtors, but whereas there was between the 
landlord-creditor and the tenant-debtor a 
certain relation of patron and client, there 
was none of that between the merchant- 
creditor and his debtor. Inhumanity in this 
relation seemed a little less qualified and 
therefore was more resented. 

It is true that the creditor begins with 
elementary morality on his side. The de- 
faulting debtor has been guilty of a breach of 
faith. He has promised and has not per- 
formed. And in modern times the unfortu- 


nate creditor who has entrusted his life's 
savings to a slippery and evasive debtor is 
at least as common as the harsh creditor who 
pursues his claim to the ruin of his debtor. 

But if the creditor may call for the fulfill- 
ment of a plighted word and the debtor may 
cry out against oppression, their pleas have 
been differently heard by the law. The 
creditor as a rule has found it easier to per- 
suade courts to aid him. That is what we 
might expect since the prevailing govern- 
ment of Western Europe has almost contin- 
uously been some form of oligarchy and an 
oligarchy tends to become a government by 
creditors. In other words, the law has more 
often condoned inhumanity than breach of 
faith and has itself undertaken the repression 
of the latter and left the former to the mores of 
the community. And in doing so, it has not 
succeeded in persuading poets and moral- 
ists that it acted as a champion of outraged 
truth rather than as an instrument of power. 

The one form of inhumanity which per- 


mits a creditor to seek satisfaction by seizure 
of the debtor's person was almost a matter 
of course. 4 Debt-servitude, quasi-debt-servi- 
tude, imprisonment for debt all these 
things have succeeded each other in Euro- 
pean history, and the last, as we know, has 
been but recently abolished in England. 5 
Substantial vestiges of it are still to be found 
there and in the United States. 6 That the 
law has been reluctant to yield to popular 
pressure in this matter is a fact which cannot 
be gainsaid. Doubtless the law had behind 
it a popular pressure of an opposite sort, 
since the term " people " generally means 
those whom we know best and hear most 
about, and lawyers and judges saw and met 
creditors more frequently than debtors. But 
yield in the main the law did, so completely 
that it went to the opposite extent. The 
result is that the great majority of claims, 
however just, cannot to-day be collected by 
legal process. And among the various ways 
in which remedy for this last thing is sought, 


no one now seriously suggests bodily con- 
straint of the debtor. 

Even long ago, in Rome itself, if the in- 
humanity was terribly patent, the creditor 
even the just creditor was not allowed 
to have it all his own way in the courts. 
Relief of distressed debtors in ancient times 
usually took the form of revolutionary and 
therefore exceptional measures, but these 
measures sometimes became permanent and 
institutional. Solon, it seems, abolished 
debt-servitude in Athens and the tribunician 
power qualified it somewhat at Rome. 7 It 
did not completely disappear anywhere, but 
it almost never again received the approval 
of the law. 

In Rome one went still further, and for 
certain classes of debtors, there was estab- 
lished what was later called the beneficium 
competentiae, the privilege of pleading pov- 
erty. 8 Debtors who bore some special rela- 
tion of trust or kinship to their creditors pos- 
sessed it, and at one time it operated as a 


modified discharge in favor of any debtor 
who had shown a real disposition to satisfy 
his obligations as far as he could. 9 This was 
a considerable advance. Although the ex- 
tent to which it was applied has varied some- 
what, it was revived again in very modern 
times and has become the principal basis of 
the institution of bankruptcy which origi- 
nally had little to do with it. 

The law, in other words, has not com- 
pletely ignored the basic virtue of humanity, 
the loving-kindness of man toward man, 
even when it was compelled thereby to dis- 
tinguish between what was legal and what 
was just. Indeed, Roman jurists accepted 
as a working principle the doctrine that le- 
gality carried to an extreme becomes it- 
self illegal. Summum ius summa iniuria. 
Strange and modern as it sounds, it is es- 
tablished and ancient law that men do not 
after all stand on a level when they face 
their judge, and that what is enforceable by 
Lazarus against Dives is not always so en- 
forceable when the roles are reversed. 




LAW and Morality were both concerned 
with the manner in which a man enforced 
a just claim. They were, of course, even 
more concerned in determining whether it 
was just. 

What makes a claim just? In the older 
systems, it was just if it was correctly ac- 
quired, correctly demanded and correctly 
enforced " correctly" meaning, in every 
case, in accordance with set forms and in an 
established sequence of acts. 

But Morality, harking back unconsciously 
to the beginnings of trade, had not forgotten 
that business originated when two men ex- 
changed equal gifts to begin a friendship or 
to cement it. If the ostensible friends were 
the lion and the lamb, was it likely that the 
exchange would be equal? And when out of 


casual and voluntary exchanges of surplus- 
age, there grew up a system in which men 
had to bargain for the necessities of their 
lives, it became apparent that the parties 
were frequently unequal, that one was 
stronger than the other. 

Was it just, when the stronger man had 
the better of the bargain? When Glaucus 
got a gold shield for a bronze one from Dio- 
mede, even Diomede's bard chuckled a little, 
because Diomede was, if anything, a stronger 
man than his Lycian friend and should have 
been more wary. The thing would be differ- 
ent if the loser had no choice but to enter the 
contract, or if his ignorance or feebleness 
were deliberately utilized. 

The difficulty is in knowing who has the 
better of a bargain. Glaucus's shield was 
not worth Diomede's as metal, since bronze 
and gold were at that time at about the ratio 
of one to eleven. But who knows whether it 
did not have other elements of value, par- 
ticularly to Diomede? It may have been 


more beautiful. It may have had a history. 
And there is no evidence that Diomede was 
not perfectly satisfied. But very early in 
organized communities one spoke of the 
value or the worth of a thing, and the notion 
spread that, if in a commercial transaction, 
the values are not equal, somebody has been 

Curiously enough, popular morality did 
not at once assume that such outwitting 
was objectionable. It was apparently unob- 
jectionable as between men of different 
states. Trading was a semi-hostile contest 
and the victor might properly take his 
booty. But toward one's own countrymen, 
it was decidedly objectionable. Men did 
not buy at home unless they were in need. 

It is not surprising that at the beginnings 
of commerce, there was no carefully worked- 
out theory of value. There was, of course, 
no theory at -all. People vaguely felt that 
the value of a thing was a quality of it as 
much as its color or its shape and this de- 


plorable economic concept got itself firmly 
fixed in the minds of most persons. 

It is the doctrine of the "right price," the 
justum pretium, a phrase which occurs in the 
Roman jurists of the second and third centu- 
ries, 1 but was fully stated by Plato in his book 
on the Laws. 2 It is not surprising that this 
desperately unsound economist should add 
this error to his other economic and political 
misapprehensions, but it remained for the 
medieval Church to carry it out to a the- 
oretical extreme which diverged more and 
more from the ordinary practices of both 
mercantile and non-mercantile life. 

It seems clear enough that the medieval 
schoolmen imagined that the proper price, 
the justum pretium, was something like an 
objective fact, independent of the personal 
desires of the seller and buyer, and of the 
accidental circumstances of the sale. 3 This 
has been declared to be an impossible con- 
ception, and economists have never been 
quite so jaunty and quite so self-confident 


as when they were riddling this absurd and 
futile doctrine which runs counter to every 
principle of every orthodox school. 4 

I do not propose to defend it in the form 
I have just stated. If there is an exact equiv- 
alent in price of every commodity and if this 
exact equivalent is permanent, then the rule 
that no one should ask more for anything 
than its equivalent, or refuse to give this 
equivalent, brings us back to the hypotheti- 
cal origin of sale. It is not a good way of 
doing business and it must end with the 
elimination of commerce altogether. Doubt- 
less the scholastic doctors envisaged this pos- 
sibility without a qualm. 

This, evidently, it is not open to us to do, 
and we can therefore make nothing of a 
justum pretium which is a sort of mystic 
double of the thing valued. But when courts 
take the position, which they have often 
enough taken, that they cannot determine 
what price a man should ask or give because 
the doctrine of the justum pretium is re- 


jected by all economists, and that therefore 
a thing is worth what any particular buyer 
will give for it, no less and no more, courts 
have, I think, shifted the problem somewhat. 

The Roman courts up to the Byzantine 
period, and the English and American courts 
throughout their history, said they would 
have nothing to do with ajustum pretium. A 
bargain was a bargain. If there was no fraud, 
no force, no threats, no obvious inadvertence, 
it was a man's legal duty to give what he 
agreed to give, even though he later found 
that he was paying too much. Two jurists 
in the second and the third centuries re- 
gretted that it was so, but the great weight 
of legal authority found no difficulty with it. 5 

The Roman idea of fraud was so much 
larger and more flexible than the English 
that the likelihood of hard bargains was 
a much smaller one than in modern times. 
To this was added a special enactment in 
the Byzantine period which protected the 
seller whenever he had received less than 


half the justum pretium. 6 The buyer, who 
was pretty well safeguarded by the Roman 
rules of warranty, could not use this new 

This late Roman doctrine, afterwards 
called " lesion, " has remained a funda- 
mental principle of Continental law. The 
medieval theologians and jurists refer to it 
frequently, and in the codes of the nineteenth 
and twentieth centuries, 7 it was expanded 
into a general test for all contracts, omitting, 
of course, the arbitrary fraction of one half. 
Any contract, oppressive for any reason, 
could be corrected by the court, and it was 
certainly an oppressive contract if a tem- 
porary need is exploited by one man to 
another's disadvantage. 

But in England and the United States the 
courts have shrouded themselves in the 
economic wisdom that if a party to a con- 
tract cannot determine what is fair for him- 
self, a court surely cannot do so. 

Can a court really do nothing about it? 


If A has agreed to give one thousand dollars 
for B's fountain pen an ordinary pen of 
an ordinary make must courts treat this 
as though fountain pens were regularly sold 
for that price? As a matter of fact, they 
were not always so helpless even in our 

I have mentioned that curious fact of 
English and American law which divides our 
procedure into Law and Equity. We are 
familiar with the traditional "Wicked Part- 
ner/' whose harsh insistence often compels 
a kindlier associate to refuse what he would 
otherwise have been glad to grant. In this 
case the severe English law provided itself 
with a "Kind Partner/' who if he got a 
chance found it in many cases easy to do 
what the other had sternly said was quite 
out of the question. When the contract is of 
a kind that its enforcement can be sought 
in Equity, the "Kind Partner " of the 
English system, the courts of England did 
examine what they called the "adequacy of 


the consideration/' which means the right- 
fulness of the price. To be sure, that in- 
veterate reactionary, Lord Eldon, succeeded 
in inducing the courts to interfere only when 
there was fraud as well as inadequacy. 8 But 
John Romilly, the son of a better man than 
Eldon, held out ineffectually as Master of 
the Rolls for the more equitable rule. 9 

Eldon's restriction was taken over by 
most American courts, not without much 
murmuring of judicial minorities. 10 And 
Eldon himself was prepared to call a contract 
unenforceable in Equity if the price was 
grossly inadequate, so inadequate as to shock 
the conscience, even such a conscience as 
that dour and flinty-hearted oligarch pos- 
sessed. 11 

But in any case the courts discovered that 
it was quite easy, when they really wished to, 
to assert that the price was inadequate, 
though they often said they would do 
nothing about it; and in at least one case 
it was a question of paying five thousand 


pounds instead of the adequate sum of 
thirty-five hundred. 12 How did the courts 
find out what the adequate price was? Well, 
the process involved no sorcery. Land 
values were testified to by solicitors with a 
fair degree of accuracy and apparent uni- 

In the era of standardization, it really is 
not hard to know the price of most com- 
modities. For one thing, the papers publish 
those prices, and we can discover daily that 
oats are firm at ten cents and butter waver- 
ing unsteadily between twenty and twenty- 
one. Therefore, if we reject the justum 
pretium of the schoolmen, and even the 
" natural price " of Adam Smith, the ordi- 
nary price which a great many persons are 
willing to pay is not altogether hidden from 

Then the problem which exercised the 
later Roman law and the entire Middle Ages 
can be rephrased as follows: May one in good 
conscience ask of a particular man a great 


deal more than most men would pay? Will 
the law sanction such a bargain, even if 
morals will not? We may answer both ques- 
tions in the affirmative if we like, but if we 
do, we must not take refuge behind arti- 
ficial impossibilities. 

Why should one man ever give more for a 
thing than any one else would? It can only 
be because of his ignorance that he can get 
it cheaper elsewhere or because of an im- 
mediate and urgent need that will not permit 
deferring the purchase long enough to go 
elsewhere, or because no one else will deal 
with him. The seller is not responsible for 
the buyer's ignorance or for his necessity. 
May he profit by it? 

The question is hardly a pressing one in 
ordinary commercial transactions. Under 
modern conditions of production and market- 
ing, ignorance of standard prices is rare, and 
so urgent a necessity that it cannot be satis- 
fied at any other time and place is perhaps 
even rarer. But ever since the Middle 


Ages, the question has been fused both by 
the theologians and Continental lawyers 
with the question of usury, with the traffic in 
money, a wholly different matter in its origin 
and based on different presuppositions. 

Public opinion that is, the opinion of 
the great majority of persons has been 
fairly constant in regarding excessive inter- 
est on money as wicked. The medieval 
Church regarded any interest as wicked, and 
its spokesmen were prone to treat the the- 
ological controversy of the Protestant Re- 
formation as a cloak under which covetous 
men sought to get rid of this major prohibi- 
tion. 13 We know how this prohibition was 
qualified and refined, distinguished and 
modified, until usury came to mean, instead 
of any interest, an oppressive form of 

The Church saw no difference, and the 
most modern legislation sees no difference, 
between taking advantage of a man's neces- 
sities in a money transaction and doing so in 


one that involved goods. There is, however, 
the difference already mentioned, that to-day 
there is little opportunity to do so in the 
latter case, but in the former special needs 
and immediate urgency are often enough 
present. Anybody can buy goods for cash. 
Not everybody can buy a present sum of 
money for a promise to return a larger sum at 
a later date. And people often have such 
need of doing this that they will make their 
promises larger and larger. 

It is their own fault that they do so and 
their own fault that they do not clearly 
foresee how difficult it will be to pay at that 
later date, but if the promise is very im- 
provident, it will probably be permanently 
impossible to persuade the majority of 
people that there is not something inher- 
ently immoral in the transaction. It is ob- 
viously a case in which the thrifty take toll 
of the unthrifty, and while unthriftiness is 
doubtless a vice and thrift is certainly a 
virtue, it is not an engaging virtue and the 


other is not ordinarily a repulsive vice. At 
any rate, since there are pretty sure to be 
many more borrowers than lenders, the 
borrower-psychology will determine the pub- 
lic attitude and that psychology is apt to 
express itself in emitting loud cries when 
promissory notes fall due. 

The law has followed the popular con- 
ception in the matter with somewhat strange 
results. Among the Greeks, traffic in money 
was all but universal. 14 Whatever else a 
man did, he also did a little business on the 
side, and if he had money, that business was 
as apt as not to be lending money at interest. 
The one official exception was Sparta, to 
which I shall recur. That this does not stand 
out more prominently in our historical man- 
uals is due to the fact that both Plato and 
Aristotle were opposed to lending money at 
interest, and Plato and Aristotle play a part 
in determining our conception of ancient 
society out of all proportion to the influence 
they exercised in it. 15 Plutarch, too, wrote a 


diatribe against money-lending, 16 and his 
homiletic essays were widely read in the 
Renaissance. But the general feeling of 
Greeks, as indicated in almost all other 
sources, was that the practice was a morally 
unobjectionable, indeed, a commendable, 
source of profit. 

Of course, oppression by money-lenders 
was a grievous abuse in the history of Greeks 
as of other nations. 17 Compound interest, 
interest at enormous rates twenty and 
thirty per cent let us say lending under 
onerous conditions, all that was bitterly 
resented and was a fertile source of social 
and political upheaval. But we do not hear 
anywhere in Greece of any law prohibiting 
or limiting interest, although laws forbidding 
certain ways of collecting it were common 
enough. 18 

The one exception, as has been said, is 
Sparta, where a unique legislation sought to 
prevent, not merely money-lending, but 
money itself except as a means of exchange. 


We may say at once that the legislation was 
a complete and total failure. Spartan kings 
and private citizens deposited abroad the 
silver and gold they forbade themselves to 
keep at home, and by the time of Plato, 
Sparta was the richest as well as for a while 
the most powerful Greek state. 19 

The opposition of the Greek to excessive 
interest was fluctuating, and it was never 
maintained long enough to demand legal 
sanction. Democratic waves might, as in 
the famous case of Solon, secure total or 
partial discharge of all debts, but there was 
no tendency to make the situation com- 
plained of permanently illegal. 20 

Perhaps the Greeks were, after all, too 
realistic or too cynical to go through the 
motions of forbidding what was so fixed in 
men's habits. Those most untypical of 
Greeks, the Spartans, did so with the inevi- 
table result we have noticed. 21 And how 
justified Greek practice was, may be seen 
from the example of the Romans. 


The Romans early proscribed money- 
lending for profit. 22 Not excessive interest, 
but any interest, quite in the manner of the 
medieval Church. This was apparently in 
342 B.C., when Rome was rapidly regaining 
control of Central Italy. Cato, we may re- 
member, thought that a merchant was a 
dubious citizen, but he was sure that a man 
who lent out money at interest was twice as 
bad as a thief. 23 However, even in his own 
days, about a century and a half after the 
prohibiting statute, that statute was already 
a ghostly survival of a virtuous Golden Age. 
Money was freely lent out, and Cato himself 
in his latter years stretched his principles far 
enough to uncover the case of lending money 
on ships, the most profitable of all forms of 
usury. 24 And within the next few centuries 
we find money freely and openly lent in every 
form which ancient society knew. Not only 
that, but custom had established a maxi- 
mum, twelve per cent, beyond which inter- 
est was extortion, although the usual rate 


was below twelve. 25 We have accordingly 
the spectacle of a definite statute quite gen- 
erally and peaceably disobeyed, a condition, 
of course, wholly unknown in later and hap- 
pier times. In the Empire there was a re- 
newal of legislation, rather as to remedies 
for usury than in relation to the maximum, 
and the matter was finally regulated in detail 
by Justinian. 26 

Even the more liberal rule was so com- 
monly and readily evaded that we can 
scarcely suppose more than a half-hearted 
attempt was made to enforce it. Doubtless 
if there had been any considerable middle 
class which suffered under usury, the com- 
plaints voiced by contemporary literature 
would have known how to make themselves 
effective. 27 It was apparently the very poor 
who were most directly and widely con- 
cerned, if we may trust the somber picture 
painted in such detail by Saint Ambrose. 28 
It may be that the preponderance of men 
of these groups in the early Church created 


that intensity of hatred toward interest on 
money which so definitely marked Christian 
pronouncements on this matter. 29 

However this may be, the elaborate and 
complicated efforts to regulate interest le- 
gally at Rome, the failure of all of them 
certainly indicate that the Greek com- 
munities were well advised in never attempt- 
ing what so secular an experience has since 
proved practically impossible of achieve- 
ment. This is further borne out by the his- 
tory of similar regulations in England, a 
history often written. 30 The canon law, the 
common law, and specific statutes piled up 
mandatory injunctions, first, against all 
interest, then against special forms of it 
as we know without effect at least, 
with an effect as the Lawyer explains in the 
Elizabethan dialogue on Usury, 31 quite op- 
posite to the one intended. When English 
law finally accepted Benthamism in this as 
in other things, and completely abolished 
usury laws in 1854, there was an additional 


experience to set beside that of Rome, longer 
than Rome's and more varied. 

The abolition of the usury laws in England 
has not made usury respectable or popular. 
It has not even made it quite legal, because 
the courts have in part undertaken the task 
which the statutes have declared themselves 
unable to perform. Whenever a loan is 
made under such circumstances that it is 
oppressive to enforce it, the English courts 
will not do so, but evidently it is only in ex- 
treme cases that they will decide that it is 
oppressive. But far within what it is so op- 
pressive that the court will have nothing to 
do with it in Jeremy Bentham's despite 
there are the loans which in popular feel- 
ing are oppressive, for no other reason than 
that a needy man has had to meet the hard 
terms of a wealthy man. It is quite true 
that scarcely any modern Englishman sees 
anything unnatural, wicked, or immoral in 
interest as such, but it is equally true that to 
take all that the traffic will bear in money- 


lending will never seem justified morally to 
the majority of any considerable popula- 

England, and Germany, especially since 
the Code of 1900, are isolated examples of 
countries without a fixed maximum of inter- 
est. A number of American States nearly 
all in the West were until recently in the 
same situation. In England and Germany 
the reason was apparently the futility of the 
restriction. In the Western States it seems 
to have been the need of tempting capital by 
advantageous terms. 32 But California, as one 
of these Western States, has within the last 
fifteen years introduced the fixed maximum 
and has strenuously tried to enforce it with 
abundant difficulty to the enforcing mechan- 
ism. 33 What its ultimate success will be 
remains to be seen. New York and most 
Eastern States with drastic regulations on 
usury have been compelled to make numer- 
ous exceptions and have scarcely contrived 
to master all the evasions which the stronger 


party in the money bargain can resort to by 
the very fact of his strength. 

We may say that in the main the law has, 
perhaps overhastily, offered its sanctions to 
prevailing popular morality in regard to 
trafficking in money. And it has had the 
somewhat rueful experience that its sanc- 
tions were found to be of extremely little 
value. What the economic causes are for 
this failure, the economists no doubt can 
readily discover. Perhaps as long as there 
is a type of money which has universal cur- 
rency, it cannot by either morals or law or 
by both combined be made into anything 
else than a traffickable commodity. And if 
it is such a commodity, it is probably true 
that there can be no justum pretium even 
in the modified sense for its use. The 
organization of modern industry has made 
that fact of little moment in ordinary mer- 
chandise. Perhaps changes in the organiza- 
tion of our financial system will make usury 
of as little serious account. 




THE duty of telling the truth is a moral 
obligation. It has been held on high ethical 
authority that it is not absolute, especially 
when those who violate it do so with an al- 
truistic motive. But it would be a little dif- 
ficult to find ethical authority for a state- 
ment which is at the same time false and self- 
serving. We may take it for granted, there- 
fore, that a seller of merchandise who lies 
about its qualities, in order to induce a buyer 
to take it, is beyond question guilty of a 
moral wrong. 

It must accordingly startle us a little to 
find courts by no means long ago saying 
of certain acts that they were "mere naked 
lies" and not enough to justify the inter- 
position of a court. 1 Or that fraudulent in- 
tent and false pretenses were of themselves 


not quite sufficient to make a legal wrong. 
Perhaps it will not startle us so much, if we 
discover that many of these things were said 
in criminal cases, where we may approve of 
leniency, or, better, where we should object 
to using prisons for collecting debts. 

But when a buyer, who has been induced 
by a lying statement to purchase an article, is 
told that the lie was legally unobjectionable, 
that may well give us pause. And there is no 
doubt that the attitude of the Common Law 
our law has for many centuries been 
that most lies uttered by the seller are venial 
enough and certainly will not justify the 
buyer in throwing up the contract. A great 
many conditions were made. It must have 
been intended by the seller that the lie should 
be believed. It must, in fact, have been be- 
lieved and the buyer damaged thereby. It 
must have been a serious lie, a lie concerning 
a serious element of the contract a good 
round whopping lie. It must not be some- 
thing which could be made to seem a matter 


of opinion. It must not be a matter about 
which the buyer had equal opportunities for 
information. It must not be something 
which could be called mere "puffing," 
"seller's talk/' "trader's commendation," 
and other euphemistic expressions. If all 
those conditions were satisfied, the court 
would solemnly find that fraud had been 
perpetrated and the buyer could rescind. 2 

I am afraid that in this we have let go of 
the bottom degree of the moral staff and are 
sinking to the level of the very deepest groan 
of the bass-viol. All these conditions are 
conditions under which a deliberate and 
selfish lie a concededly immoral act is 
by law enabled to be not merely unreproved, 
but prosperous. How is that to be recon- 
ciled with the least regard for that connection 
between morals and law of which so much is 
made in words? 

The Common Law had its explanation 
ready. The trading gentry stood almost al- 
ways on quite equal terms. These men dealt 


"at arm's length. " The seller was doubtless 
no worse than the buyer. If the one over- 
praised his wares, be sure the other dispar- 
aged them. Surely men in business knew how 
to take each other's expressions and if they 
were inexperienced simpletons, no one forced 
them into trade. If there was no conspiracy, 
no false weights and measures, why should 
a man lose his bargain because of a few 
words? 3 

I may say at once that the situation is not 
really so bad as that. The law has long ago 
pulled the reins far tighter than was the case 
a few generations back. As far as the Civil 
Law was concerned, that had derived from 
the Roman Law an idea of fraud, of dolus, 
which made short work of most of these con- 
ditions and qualifications. A deliberate lie 
was fraud, and any planned attempt to in- 
duce the buyer to misapprehend what he was 
buying or the conditions under which he was 
buying, was fraud. 4 And the Roman market 
commissioners, the sediles, had scant patience 


with most of the sound commercial reasons 
why a lie was no great matter in a sale. 5 

It must be confessed that even the Roman 
sediles and the Roman prsetor thought that 
some latitude should be allowed to an en- 
thusiastic vendor, but it was a latitude far 
more limited than that of the Common Law, 
as the Common Law remained till well to- 
ward the end of the nineteenth century. 

But honesty is not merely a matter of 
truth-telling. It is also a question of discreet 
silence. It may be that the parties of the sale 
normally deal at arm's length, but the arm 
of the vendor is in at least some cases appre- 
ciably longer than that of the purchaser. He 
has the inestimable advantage of having 
been for some time in possession of the 
goods. He may have learned much about 
them. How much of this must he tell? 

Well, even the strictest morality will hardly 
require him to publish all the defects of his 
merchandise by the town crier. But it does 
seem that he ought to say something about a 


peculiar knock in the engine to an intending 
purchaser. The Roman Law very early set- 
tled the matter thoroughly and completely. 
It made no difference whether the seller dis- 
closed all he knew or not. Unless he specifi- 
cally sold the thing as it was, he was responsi- 
ble if it turned out not to be what a reason- 
able man would expect and he had better 
square himself with the buyer as promptly as 
might be. 

That is a high standard, higher perhaps 
than Roman practice. It is curious that 
Saint Thomas Aquinas asked less than that of 
a vendor and suggested a number of cases in 
which defects might be concealed, although 
it was a little better to disclose them. 6 But 
the Civil Law clung to its doctrine that the 
vendor must see to it that the thing was what 
it was supposed to be and there is no Con- 
tinental legal system which would accept 
any other rule. 

The Common Law was somewhat tougher- 
minded. Having in contemplation two men 


equally able to take care of their interests, it 
grimly bade them fall to and let the better 
man win. 7 We take as an example the historic 
case of Chandelor v. Lopus, decided in the 
Exchequer Chamber at the very beginning 
of American colonization. 8 Chandelor had 
bought of Lopus what the latter called a 
bezoar stone a piece of organic resin de- 
rived from the East and credited with medi- 
cinal and magical properties. For this he 
paid one hundred pounds, which was at that 
time the yearly income of a gentleman. When 
Chandelor took it home, it turned out not to 
be a bezoar at all. The court held that as 
Lopus had not used the word " I warrant it/' 
Chandelor was a fool for his pains and was 
out at least one hundred pounds. 

Now it is to be noticed that the King's 
Bench had found for Chandelor and one of 
the Barons of the Exchequer was also of the 
opinion that the action should lie. They 
may have done so because they felt that 
fraud had been present, but at any rate it 


seems clear that, at the beginning of the 
seventeenth century, if a man wanted any- 
thing very badly, he had to be wary. If he 
wanted a bezoar stone, he must ask the 
vendor to warrant that it was so. It took 
some two centuries to get rid of the magic 
word "warrant," and it still is the case that 
you must get a positive statement of fact 
from a seller that a particular quality is pre- 
sent before you can assume anything about 

This is summed up by a famous Latin 
phrase which is, next to " habeas corpus," 
probably the best-known legal expression 
among laymen, the phrase " caveat emptor," 
translated " Let the buyer beware." Because 
it is supposed to be Latin, an astounding 
number of persons, including a few American 
judges and the late Anthony Trollope, spoke 
of it as Roman. 9 Let us keep in mind that, 
so far from being Roman, it is bad Latin, 
and, from the Roman point of view, worse 
law. 10 


It has occasionally been said that it was 
extraordinary for an honest people to bear so 
long with so dishonest a rule. That the rule is 
dishonest, there ought to be little doubt and 
the astonishment seems to me to be war- 
ranted. But Englishmen and Americans 
have borne with it, and, in mercantile trans- 
actions, the only qualification was that, in 
general, the practice of business men was 
better than the law they insisted on having 

This is changing. Courts are becoming 
more definite in regard to fraud in contracts. 
" Seller's talk" is reduced to smaller and 
smaller proportions. And the rule of caveat 
emptor has been very appreciably modified 
by legislation and by court decision, and also 
somewhat by the fact that competition for 
foreign markets brings us sharply against a 
mass of moral judgments differently de- 
veloped and differently formulated from our 
own. 11 Caveat emptor may have had some- 
thing to do with the fact that before the war 


German goods were successfully crowding 
out our goods in South America. 

In the United States, the local merchant is 
diminishing in importance if not disappear- 
ing. Even when he keeps his shop and does 
not become a link in a chain store, he sells 
relatively few things that he knows anything 
about. His goods, whatever they are, come 
in packages sent him by distributors, who 
control the local markets for nationally ad- 
vertised products. The local dealer, there- 
fore, is really under no temptation to lie 
about his goods. The labels on them will lie 
for him. 

Advertising is a business. 12 There can be 
no doubt about it. I suppose the mere equip- 
ment and budget of advertising establish- 
ments runs into tens of millions a year, and 
surely the amount of money spent yearly 
in advertising must run into billions. To ad- 
vertising in itself, its effects and economic 
utility, I shall briefly refer later. For the 
present, let us consider this relatively modern 


fashion of salesmanship in its relation to the 
elementary moral problem of honesty. 

It is said that the English Quaker, George 
Cadbury, advertised the Cocoa from which 
he created a fortune for his family, without 
pictures or devices and without commenda- 
tory adjectives or descriptions, simply by 
the words "Cadbury's Cocoa. " That is 
certainly not the way other things are adver- 
tised nor the way Cadbury's Cocoa is adver- 
tised at the present time. But if the story is 
true, this may be said to be advertisement in 
its simplest form. It calls attention to what 
is offered and no more. 

As has been said, most advertisement is 
not like that. The purpose of advertisement 
is not to call your attention to the commodity 
and then to leave it to your own judgment 
whether you will buy it or not, but to exercise 
some coercive force upon your judgment, to 
wheedle it, surprise it, overwhelm it, or, at 
the least, persuade it, and it has not been 
found, in spite of the successful example of 


Cadbury's Cocoa, that the matter can be 
managed among us without a deal of self- 

Now, self-laudation may not be immoral, 
although it is scarcely good manners. Hu- 
mility is, to be sure, a moral virtue, and is 
declared, by the accepted creed of the pre- 
vailing Western religion, to be one of the 
characteristic virtues of that religion. How- 
ever, we have agreed that we shall not judge 
of business ethics by quite the loftiest stand- 
ards, and that we shall content ourselves with 
qualities which would make no impression on 
the Congregation of Rites in proceedings for 
formal canonization. We shall, therefore, 
pretermit any allusion to the fact that there 
is something like indelicacy in descanting on 
one's own merits and confess that gentlemen, 
who would not boast of their family or their 
wealth, will brag unashamedly of their cigars 
or their dogs. Why may not merchants, who 
imperatively must sell their goods if they 
wish to remain merchants, do as much? 


Ben Sira, we may remember, did not say, 
as Aristotle and Plato did, that a merchant 
could not possibly attain the highest excel- 
lence, but merely that he would find it diffi- 
cult to do so. If merchants in his day had 
used our advertising methods, he would have 
been confirmed in its dangers. It may be 
doubted whether more than a minute frac- 
tion of the advertisements in existence have 
nothing further to reproach themselves with 
than a little blatancy of self-satisfaction. We 
may say with all moderation that the state- 
ments made are not always literally true, are 
sometimes very far from being true in any 
sense. And truth, it will be admitted, is more 
than manners or propriety. 

The temptation certainly is extremely 
great. Advertisement is a matter of compe- 
tition. If Jones's Sarsaparilla cures three dis- 
eases, it will go hard but that Smith's Com- 
pound will cure four. And the temptation 
is increased by the fact that those who be- 
lieve neither Smith nor Jones are apt to look 


at this sort of emulation in mendacity with 
an amused smile. 

In this respect, the law has recently got 
somewhat in advance of popular morality. 
It was not disposed to look upon such state- 
ments with an amused smile. If, as Mr. 
Bumble asserted, "The law is a hass," it is at 
least a solemn ass and does not see the point 
of some jokes. A certain latitude is, of course, 
allowed to "puffing." A man may call his 
goods "The Best" or "The Finest," even 
though they are not the best or finest, and it 
is not supposed that sensible men will take 
these words seriously. But if specific state- 
ments are made and they are false, that 
generally is now called fraud and any one 
may claim the resultant damages. 

And again it can hardly be alleged that the 
marked changes which have come in this 
particular matter have been produced by an 
uncoerced development of mercantile hon- 
esty. The vigorous agitation which was di- 
rected a generation ago against misleading 

OF GAIN 6 1 

food and drug advertising was successful, but 
it convinced legislators and courts without 
having affected popular feeling to any great 
extent. It is a curious fact that men still buy 
preposterous patent medicines in the vague 
hope that they possess powers which the 
manufacturers dare not openly claim for 
them. And the courts are apt to be insistent 
that, in this particular field of advertising, 
the statements shall not merely be approxi- 
mately true, but quite strictly and literally 
true. Even Lydia Pinkham was taken seri- 
ously by these humorless persons on the 

We must admit that in other matters the 
courts have dealt with truth somewhat less 
precisely. If a lubricant is advertised as 
"oil" and is composed of only seventy-five 
per cent of oil, is that a serious falsehood? 
The majority of the court, in New York, etc., 
Lub. Co. v. Young, 13 thought it was not. If 
clothing is advertised as the manufacture of 
a company, when as a matter of fact not 


more than ninety percent is so manufactured, 
is that an objectionable falsehood? The New 
Jersey Vice Chancellor, in the case of Hilton 
v. Hilton, 14 allowed himself to say "No," and 
declared that "It makes no difference to the 
public by whom the goods are manufactured 
so long as the public is satisfied with the 
article it gets.'* How, under modern condi- 
tions, public satisfaction or dissatisfaction 
in such matters is expressed, the learned 
Chancellor did not inform us. Again, when 
Monsieur Coty of Paris began to sell the per- 
fume he calls L'Origan, the question arose as 
to whether he might rightfully so call this 
highly profitable concoction. The court 
learned, as many of us might have done, for 
the first time, that "origan" or origanum was 
"a genus of labiate plants of the tribe Saturei- 
neac and the sub-tribe Menthoideae." It was 
admitted that the ingenious Monsieur Coty's 
product did not contain the remotest sugges- 
tion of the true origanum, distilled examples 
of which were literally pressed under the 


court's nose and declared by the court to 
smell like turpentine. But the court decided, 
and the upper court sustained it, that the 
public did not know anything about the 
genus of labiate plants, and that Monsieur 
Coty's departure from truth, if he had de- 
parted from it, was irrelevant. 15 

In other cases, however, the courts have 
taken a man's statement more seriously. In 
1921, a Rhode Island baker instituted a 
bread-making contest among the women of 
Providence, Rhode Island, and announced 
that the prize-winning loaves would be ana- 
lyzed and a bread baked as a result of this 
analysis would be marketed as " Liberty 
Bond" bread. As a matter of fact, he kept 
making bread on his older formulas in the 
old fashion. The court, in the case of Gen. 
Baking Co. v. Gorman, 16 decided that he had 
been guilty of a culpable falsehood and would 
receive no protection from the law if another 
man infringed his trademark. And yet, if we 
applied the Vice-Chancellor's test in the New 


Jersey case, the public may have been satis- 
fied with what it got. 

It is accordingly not easy to be sure what 
attitude the courts by themselves would 
have taken toward the process of making ad- 
vertisements conform to reasonable stand- 
ards of veracity. There is a marked vacilla- 
tion. The New Jersey case represents per- 
haps the lower reaches of legal morality. 
When Lord Westbury, in the case of The 
Leather Cloth, made the statement, "If 
there is a wilfully false statement, I will not 
stop to inquire whether it is too gross to mis- 
lead/' I7 he may be said to have risen to a 
little higher position. But it cannot be as- 
serted that the English courts, any more than 
the American, have always been definite and 
consistent in their dealing with this question. 
Sometimes a Spanish look and a Spanish ad- 
dress and the word "Habana" on a cigar 
box have been called "an elaborate concate- 
nation of pictorial lies," and sometimes they 
have been disregarded. 18 And it is curious 


to note in this connection that " California 
Syrup of Figs," which uses fig juice solely 
for flavoring and otherwise is innocent of any 
connection with figs, was declared by an 
English court not to be improperly de- 
scribed I9 or at any rate not to be too 
improperly described while the United 
States Supreme Court found the name to be 
false and fraudulent. 20 

But in all probability the highest ground 
taken in regard to truth of advertising has 
been that of the Federal Trade Commission. 
This extraordinary and admirable tribunal 
was created by an Act of Congress of Sep- 
tember 26, 1914, at almost exactly the same 
time as the Clayton Act, and its creation 
was part of the renewed movement against 
mergers and consolidation in other words, 
against monopoly, which is still popularly 
and legally anathema. 

The function of the Commission is to pre- 
vent unfair competition, but the " unfair- 
ness " is not conceived, in the sporting sense 


of the word, merely as an improper advan- 
tage taken by one competitor of another. 
The Commission need not wait for a com- 
plaint on the part of an injured contestant; 
nor even for one on the part of a consumer 
actually deceived by the practices of a 
particular person or company. It may of its 
own motion investigate, hear, judge, and se- 
cure through the court the enforcement of 
its decree. And the striking character of its 
action is that it does not concern itself with 
punishment for past misdeeds. It is directed 
to the future, and its orders contain the 
commands now dreaded by dubiously honest 
business throughout the United States 
that such business "cease and desist" from 
certain practices which the Commission 
deems improper. 

One of its earliest orders dealt with truth 
in advertising. A well-known company ad- 
vertised by circulars its teas, coffees, and 
sugars, and the statements about these 
products were couched in highly colored 


phrases. The teas, said the circular, had a 
pronounced yet delicate tea flavor with an 
appealing fragrance. The company had a 
special representative in Japan who person- 
ally visited tea-gardens and took only first- 
crop pickings from upland soil. Similarly 
the company's coffees were upland coffees 
fresh, savory, and fragrantly tempting 
the pick of the crop from the greatest coffee 
regions in the world. Again, it bought sugar 
in such huge quantities that it paid less than 
others and could therefore sell it for less. 

This colorful romance, with its emphasis on 
"uplands," was probably written by some 
man or woman who had won deserved dis- 
tinction as a writer of advertising copy. It 
had many merits, but truth was not one of 
them. The company got its teas, its coffees, 
and its sugar where any one else might have 
got them and for the same price. The 
Federal Trade Commission ordered it to 
cease and desist from fantasying in its circu- 
lars about upland hills which grew fragrant 


teas and savory coffees and the United 
States Circuit Court sustained the order. 21 

And yet it is doubtful whether much of the 
coffee, tea, or sugar sold by the company was 
bought because of the statements made in 
the circular. If the circular was read at all, it 
was probably read for its literary merits. 
The commodities were purchased as those of 
that particular company and valued as such. 

The standard set by the Commission is 
indubitably a good standard a better 
standard than courts of a generation ago 
were willing to adopt, and has in the main 
secured the approval of the United States 
Courts and exercised an elevating effect on 
the State Courts. To be sure, some business 
men and some lawyers have been a little 
restive. So in the case of the Chicago Portrait 
Co. v. Federal Trade Commission, the ma- 
jority of the court overruled the Federal 
Trade Commission. 22 The case was one in 
which a company offered to draw a portrait 
of your grandfather from a photograph and 


sell this priceless masterpiece to you for a 
small sum if you were lucky enough to get a 
winning number. Everybody got a winning 
number. The minority of the court, in a 
briefly contemptuous opinion, declared this 
to be a mild sort of fraud and one that was 
properly enjoined by the Commission. The 
majority took refuge in the fact that no 
competitor was injured. 

But the trend of the decisions is in favor of 
the Commission. In a very recent case, a 
manufacturer called his product " English 
Tub Soap." He did not say it was made in 
England and the words are intelligible in a 
different sense. The Commission and the 
court, taking regretful notice of the fact 
that there is a general impression doubtless 
wrong that such soaps are better made in 
England than here, found that the suggestion 
was false and misleading and permanently 
prohibited it unless the soap was in fact of 
English manufacture. 23 

It may be well to remember that this type 


of legal sanction is quite different from the 
remedy for fraud. It is always open to a con- 
sumer who has bought an article because of 
a false description to rescind his purchase or 
to obtain damages. And this might be done 
without any reference to the Federal Trade 
Commission. But in such a case the com- 
plainant must show that he relied on the 
description, that it was knowingly false, and 
he must estimate in money the amount of his 
damage. The damage is likely to be small 
and the trouble likely to be great. Such a 
procedure as that of the Federal Commission, 
with its formidable " Cease and Desist/' goes 
to the heart of the question and can apply a 
moral test of truth that is on a plane dis- 
tinctly above the ordinary business one. 24 

I do not believe that the Federal Trade 
Commission, or the courts either of the 
United States or of the separate States, will 
succeed in compelling all advertisers to say 
no more in their public announcements than 
they could prove to be literally true. It 


may be that if this were done every advertise- 
ment in the world would read like that of 
Cadbury's Cocoa, perhaps with advantage 
to the advertising budget of many business 
enterprises. I merely wish to point out that 
the courts at their best are somewhat in ad- 
vance of the popular conscience in this 
matter, since, in advertising, the wildest 
flights of hyperbole are apt to seem to most 
people a venial offense, if so much as that. 

It is quite probable, however, that the 
standard set by these legal bodies indicates a 
direction in which there is likely to be no 
violent turning back. A casual glance at 
newspapers or magazines shows that there 
are fewer things said in the advertising 
columns which are plainly not so than was 
the case a generation ago. But neither in 
law nor in business ethics has the advice of 
Proverbs been much heeded: "Let another 
man praise thee, and not thine own mouth; 
a stranger, and not thine own lips." as The 
manufacturers of dentifrices and automo- 


biles, of cigarettes and washing machines, 
prefer to praise their wares with their own 
lips and thus indirectly praise themselves. 
Indeed, it is not always done indirectly. We 
can without difficulty recall cases in which 
advertisers unmistakably show that they 
have a high opinion of persons who like 
themselves have enriched the world with 
such excellent commodities. 

Good manners, certainly, the courts and 
the Commission have not instilled into adver- 
tising, and one cannot claim even that the 
law exercises a categorical compulsion on ad- 
vertisers, to keep at all times within the 
limits of soberly scientific description. But 
something has been attempted and the law 
has quickly enough sanctioned the effort, and 
has made the sanction at least partially effec- 
tive. When it shall have done so completely, 
the millennium of advertising ethics will not 
be more than a thousand years away. 

For to tell nothing but the truth and to 
omit laudatory adjectives may be the begin- 


ning of advertising morality, but it is not the 
end. There are those less obvious forms of 
falsehood which in casuistry and in law are 
called the suppressio veri and the suggestio 
falsi, concealing the truth and hinting a lie, 
methods which certain types of advertising 
have carried to a pitch of skill and success 
that leaves us breathless. 

Illustrations crowd on us. A famous soap, 
which almost elected a President of the 
United States, made its reputation by ad- 
vertising that it floated. Why should float- 
ing be a saponic virtue? Chemists have told 
me that it is not, but on the contrary a vice, 
and that good soaps ought not to float. I 
hasten to withdraw myself from a contro- 
versy in which my incompetence would be 
glaringly evident and merely state that no 
reason was ever presented why floating 
made this soap better than its rivals; but a 
general impression was indubitably created 
that floating was a mark of high quality. 
That this was done deliberately can scarcely 


be doubted and, if floating is no such mark, I 
am afraid that over-rigid moralists would 
have found in the statement more than a 
trace of suggestio falsi. 

A negative form of this device has had an 
unforeseen reverberation. For a full genera- 
tion a certain baking powder was advertised 
as composed of cream of tartar and totally 
without phosphates. The insistence that 
phosphates were absent was made so much 
of a virtue that housewives must have shud- 
dered when the word " phosphate " was ut- 
tered. Now, in very recent years, cream of 
tartar had got to be extremely costly and the 
company began to market a baking powder 
which it was forced to describe as "a phos- 
phate powder " because it was one, and the 
Food and Drugs Act is unfortunately spe- 
cific. It found that the bad reputation it had 
itself created for phosphates appreciably 
hindered the sale of the new powder. It at- 
tempted to overcome this difficulty by a trick 
more ingenious than honest which the courts 


incontinently stamped on, 26 and the salesmen 
of the baking powder in question are prob- 
ably engaged to-day in explaining that there 
are phosphates and phosphates, and that 
some are thoroughly respectable. 

But we may go further. Advertising has 
become an art, a science, a psychology, and a 
philosophy. Books are written which bear 
all these titles. 27 I suppose in all these books 
it is declared that truth is the primary virtue 
in this field and that no departure from it 
can be condoned, although truth is not al- 
ways prescribed in a supersaturated solu- 
tion, much less to be taken neat. But there 
is an insistence among even the professed 
psychologists of advertising on catching and 
retaining the attention and arousing the 
interest of the public, which has a perilous 
similarity to the training received by the 
Artful Dodger. When a benevolent old 
gentleman is invited by an affable stranger to 
look up at a new kind of airplane passing, the 
affable stranger may be interested in a strik- 


ing aerial phenomenon or he may be trying to 
pick the benevolent old gentleman's pocket. 
It is an ambiguous device, this solicitude to 
gain a man's attention. 

Now, the theory of advertising, on what 
seems to be its highest plane, is apparently 
that if we can induce a man to listen to us 
long enough, no matter how we get him to do 
so, he will buy our goods whether he wishes to 
or not or whether they are worth buying or 
not. We must put him in a purchasing frame 
of mind, or, better, we must prepare him to 
act in our favor, when he gets us into a pur- 
chasing frame of mind, as at some time he 
must. He will then buy the commodity in 
regard to which he retains the most vivid 
and pleasant picture, although the com- 
modity itself was but an incident in the 
picture. Or else he will remember a slogan 
which amused him and he will buy the goods 
sold by a man clever enough to select such a 
slogan. The writers of books in the psychol- 
ogy of advertising have evidently no flatter- 


ing opinion of our intelligence, and the hu- 
miliating fact is that they are apparently 
right or else all Americans would not at one 
time have been eating powdered scraps as 
breakfast food or be still buying lots on a 
sandy waste upon which a supersalesman has 
conjured the cloud mirage of a metropolis. 

In other words, it is taken as axiomatic 
that the purchase of wares may be properly 
stimulated by means that have no connec- 
tion with the qualities of those wares. The 
amiable optimist who has thrilled successive 
generations with the sentence, "Make a 
better pair of shoes than another man and the 
world will beat a pathway to your door," has 
evidently mistaken what he meant to say. It 
ought to be, "Get the world to beat a path- 
way to your door on some other pretext, and 
you can sell it anything." 

That this arouses no moral indignation 
must be evident. And if there is no fraud or 
misrepresentation, the law will do nothing 
for a man who has bought what he does not 


want because he liked the literary style of the 
man who sold it. But if we should ever reach 
the point at which mercantile honor will re- 
ject, first as an impropriety and then as an 
immorality, the doctrine that the qualities of 
an article are a secondary consideration in 
the process of marketing, the law would find 
no difficulty in suggesting a means of enforc- 
ing a better rule. If there were an interval of 
repentance in every bargain not completely 
executed subject to reasonable compensa- 
tion on both sides it would be more diffi- 
cult to beguile men into purchases with 
which a rational buyer would not be satisfied. 
The law of Continental Europe has almost 
reached this attitude toward many bargains, 
though this development has come from 
other sources than abuse of advertising. 

One of the difficulties which advertising 
entails is the pressure of its example. It is not 
merely the emulative suggestion by which 
a dealer is tempted to go his competitor one 
better. It is taken to be almost an admission 


of demerit if merit is not excessively asserted. 
I remember a great school system in which 
the teachers had originally been classified as 
Poor, Fair, and Good. The desire of extolling 
certain favored members created the grades 
of Very Good, then Excellent, then Superior, 
and perhaps by this time they have got to 
Superfine. At any rate, some time ago a 
teacher who was marked merely Very Good 
would be dismissed as incompetent. So it 
may be that an automobile manufacturer 
who described his car accurately and pub- 
lished only actual photographs of it would 
be supposed to be admitting that it was a 
poor contrivance, scarcely worth the cost of 
the materials. " If you want cream," said an 
editorial writer in an American weekly, "you 
must ask for Extra Special Grade A Double 
Cream. That means cream." 

There is a limit imposed by our Occidental 
nature. A Chinese traveler once informed 
me that in his home he would say to a guest, 
on pressing a cup of tea upon him: "Shall I 


be pardoned for venturing to offer you this 
wretched tea, wholly unworthy of your con- 
sumption ?" Morals, with law following or 
preceding, may some day bring us to the 
Cadbury system of advertising. We shall 
probably never go all the way to the Chinese 

OF GAIN 8 1 



MERCHANTS in medieval society formed a 
class and a class meant a definite and semi- 
religious organization or group of organiza- 
tions. The members were bound to each 
other by solemn pacts and oaths and had to- 
ward outsiders certain precise responsibili- 
ties. No one professed that the duties toward 
each other and toward outsiders were the 
same. If merchants maintained a double 
standard of conduct, it was at least an 
openly and frankly acknowledged one. 

The double standard still exists among 
merchants as among other professions which 
had in medieval times a similar organization. 
There are rules which are applied to mem- 
bers of the gild in their relations to each 
other; and other rules which govern the rela- 
tions of the members to everybody else. In 


fact, the term " ethical" has got a special 
meaning in these cases and primarily de- 
notes the former group and not the latter. 1 

This division also corresponds to the two 
aspects of business ethics which still vitally 
concern us. Business morality at the present 
day is exhibited in the restriction of competi- 
tive practices and in the protection of the 
consumer. What may a merchant do or not 
do in securing a customer whom another 
merchant desires? What may a merchant do 
or not do in inducing the customer that he 
has secured to pay the price asked for the 
goods? What the law has had to say on the 
latter subject we have considered. We may 
now turn to the legal attitude toward com- 
petitive practices. 

Competition may be, as some have said, 
the soul of trade. 2 It also is the mother of 
many devious devices which indicate that 
this soul has much that is fleshy and earthly 
clinging to it. And further, if it is the soul of 
trade, it is a relatively new soul, since in 


medieval times the essential characteristic 
of a merchant was that he possessed a 
privilege which strongly savored of mono- 
poly. 3 Those persons accordingly who see in 
restriction of competition a transgression of 
the immemorial rights of Anglo-Saxons will 
do well to remember that it is a bare four 
centuries since competition was reluctantly 
accepted as an evil if necessary incident of 
the process of trafficking in commodities. 

But, however recently established, the 
sanctity of the competitive system as such is, 
at the present time, very much of a dogma 
with a majority of business men, and this is 
still the case despite the serious difficulties it 
provides for those who attempt to reconcile 
their dogmas with their conduct. It is equally 
a dogma for the law, where restraints on 
competition are treated as severely repre- 
hensible, capable of avoiding contracts and 
accomplishing other legal confusions. We 
may then properly ask ourselves what the 
ideal of this system is; what standard of 


morality business requires in this matter of 
competition, in order to be able to see how far 
deviation from it is permitted either by 
ethics or by law. 4 

There is little doubt about the ideal. It is 
the ideal of sport a fair field and no favor. 
But it is, after all, not completely the ideal of 
sport, since there are no handicaps; the lame, 
the clumsy, the old, start from scratch with 
the fleet, the agile, and the young. And if the 
victor owes his success to his sound body and 
supple muscles more than to his skill and 
training, there is no doubt that he is entitled 
to it. 

The ideal is still more plainly that of sport 
in that it accepts no excuses. The victory 
may be won by a lucky accident, the condi- 
tion of the track, the wind blowing from a 
certain angle, the temporary indisposition of 
a rival. None of these things are considered, 
and the man who first breaks the tape pro- 
perly claims the award. 

Both the sporting and the business ideal 


demand no generosity on the part of com- 
petitors, though they may applaud it. And 
success in either case is consistent with a 
great many moral defects of a wholly differ- 
ent type. The winner in a race need not be 
kind, or grateful, or considerate, or delicate, 
just as he need not be handsome or well- 
connected. In fact, he may be vicious and 
profligate, provided he does not thereby 
completely undermine his constitution and 
lose the power of submitting to training when 
it is called for. But there are two distinctly 
moral requirements which are made of him. 
He must not actively prevent any one from 
competing, and he must not foul. 

We shall do better, I suppose, if at least 
for a while we abandon our analogy and con- 
fine ourselves in terms as well as in spirit 
to business competition. Two tailors open 
shops in a street that will comfortably sup- 
port only one. Obviously, it would be highly 
advantageous for either if he could eliminate 
the other. He must not kill him, assault him, 


blow up his shop, threaten him, or slander 
him. That has nothing to do with competi- 
tion. He must not do these things, ethi- 
cally or legally, to anybody, whether he is 
a competitor or not. The legal sanctions 
which are directed against these acts did not 
grow up in this connection and do not find 
their chief illustration here. And obviously 
no man will be heard to defend immoral and 
illegal conduct of this sort by pleading that 
he was impelled thereto by the success of 
his rival. All certainly is not fair in busi- 
ness. 5 

How far may he go? May he play on his 
rival's fears or ignorance? May he persuade 
the man's landlord not to renew his lease? 
May he bribe his competitor to withdraw? 
May he ruin him by " cut-throat competi- 
tion "? A conscientious man will not do these 
things, but there is a business conscience as 
well as a private conscience, and if folklore 
and popular literature are to be believed, 
these devices do not always arouse any great 


vigor of reprehension. To get rid of a com- 
petitor by schemes short of force or threats 
or patent fraud has not infrequently seemed 
an example of clever strategy, even when the 
cleverness must dispense with the approval 
of professional moralists. And we must re- 
member that the judgment of moralists on 
this question is not quite uniform. The doc- 
trine that the end justifies the means has few 
formal defenders, although it has many prac- 
titioners. And there are certain approxima- 
tions of this principle which are difficult to 
refute. It is largely a matter of just how 
good the end is and just how bad the means. 
Suppose the arrival of a competitor means 
that two men will have a bare or an inade- 
quate livelihood where one man would have 
had an ample one. May the one whose living 
is threatened defend himself by the measures 
I have indicated? I am not sure that Soc- 
rates or Aquinas or Herbert Spencer would 
have said "No," though possibly Kant might 
have done so, and I think the general public 


would approve of self-defense, even by des- 
perate means. 

As far as the law is concerned, it has found 
some of these situations a little difficult to 
deal with. When one man has frightened off 
a competitor by a planned scheme which 
avoided direct infraction of the law, the 
wrongs complained of were usually too vague 
for redress. But there were other occasions in 
which the acts were clear and definite enough. 
The courts were early faced with the question 
of whether a man can be bought off. In the 
upper reaches of finance, it is called consoli- 
dation ; and in the case of small retail estab- 
lishments, it takes the form of purchase of 
good-will, buying another business "out" 
rather than "off." As to the propriety of 
such contracts, the post-medieval law was 
extremely dubious. To allow them freely 
made monopolies possible. To forbid them 
wholly restricted somewhat freedom of ac- 
tion. Or, better, it allowed a man to receive 
value for a promise and impudently break it. 


Which is open villainy not to be borne on 
pretext of public policy. 

So, in a famous eighteenth-century case in 
England, it was decided to be reasonable in 
the matter and to make it possible for a man 
to withdraw from competition with a specific 
person, but not from all competition in a 
particular field. 6 The courts obviously did 
not contemplate the situation in which busi- 
ness is done on a national or even interna- 
tional scale. An oil producer who promises 
not to compete with Standard Oil or the 
Shell Oil Company will be hard put to it to 
find a spot where he can sell oil without so 
competing. The courts have never quite 
made up their minds what they must do in 
cases of this sort, and they have generally 
been relieved from such consideration by the 
fact that in large affairs tremendously 
large affairs economic developments make 
freedom of competition an academic ques- 

Buying your competitor out may be 


morally indifferent and within reasonable 
limits is legally permissible. But the situa- 
tion is altogether different when it is a ques- 
tion of ruining him. Can that ever be morally 
justified? We must remember the extreme 
case in which the competitor is an interloper 
who has no business there, and whose coming 
is likely to be harmful enough to established 
traders. Still he does no legal wrong in com- 
ing, by virtue of a system which has somehow 
convinced itself that there cannot be exces- 
sive competition in any field. Being there 
rightfully, may he be driven to the wall by 
a type of competition that has earned the 
bloody sobriquet of " cut-throat " ? 

Briefly this consists in underselling him 
even at a loss to yourself. This is only feasi- 
ble if you can bear the loss better than he 
can a fact that at once implies a certain 
superiority in power and makes us doubt the 
good faith of the plea of self-defense. We, 
therefore, in ordinary instances have the ad- 
ditional evil of the oppression of the weak by 


the strong. There is also frequently enough a 
violation of local loyalties. A chain store 
enters a neighborhood in which a small shop 
has maintained a respectable and useful 
existence. It is generally possible for the 
newcomer to drive the other out of existence 
by sheer superiority of resources, since it 
obviously can run at a loss for a considerable 
time. The proceeding is a highly unpopular 
one, but local loyalties, however much in 
support of the local trader, will ultimately 
succumb to the lure of the lower price. 

Apparently this is an improper and un- 
ethical practice by the judgment of most 
men. Is it also illegal? It is hard to see how 
the courts can act upon it, and yet the at- 
tempt has been made. The difficulty lies in 
the fact that the general public receives an 
immediate benefit from the drastic reduction 
of prices, even if the benefit is only tempo- 
rary. And it certainly can be only temporary. 
When the competitor is safely disposed of, 
the successful price-cutter will inevitably go 


back to a price on which he can make a profit 
and very likely will recoup his losses. 

The Lords Justices of the English Court of 
Appeal, in the great case of the Mogul Steam- 
ship Co. v. McGregor, were very emphatic 
that the practice was legally unobjection- 
able. "All commercial men with capital/' 
said Lord Justice Bowen, "are acquainted 
with the ordinary expedient of sowing one 
year a crop of unfruitful prices in order, by 
driving competition away, to reap a fuller 
harvest of profit in the future." 7 His lord- 
ship, true to the tradition of Cato and Ben 
Sira, has sought to make this respectable by 
encasing it in an agricultural metaphor, but 
he has really no doubt of its moral inferiority. 
In substance he is of the opinion, to use his 
own words, that "competition, however 
severe and egotistical, if unattended by cir- 
cumstances of dishonesty, intimidation, mo- 
lestation, or other illegalities, gives rise to 
no action." To hold otherwise, he tells us, 
would be to "fetter trade," it would be a 


"misfortune/' it would be beyond the court's 
power because no court knows what price 
either competitor ought to charge. 

Courts have a way of crying "non pos- 
sumus" when they mean "nolumus mutare. 1 ' 
And we may share the court's doubt whether 
there is always a practical way of fixing what 
a fair or reasonable price is. But whether 
courts must, therefore, license the severe 
egotism, which will deliberately use a large 
financial reserve in order to ruin a rival, is 
perhaps another matter. 

If courts will not prevent a price war as 
such, they will occasionally interfere when 
they find what Justice Holmes has grimly 
called " disinterested malevolence." 8 There 
is a famous case in which a banker in Minne- 
sota entertained a grievance against a local 
barber, and equipped and financed an opposi- 
tion barber shop which ran at a loss long 
enough to ruin the object of his ill-will. The 
court allowed damages because the banker's 
act was colored by no desire, not even the 


slightest, of profit to himself. 9 A touch of ra- 
pacity would apparently have purged the act 
of illegality, as such a touch did in a recent 
and well-argued case in New York. 10 But a 
little before the New York case a famous oil 
company in Iowa, which had been in almost 
exclusive control of a large district, found 
that a retailer in that district had purchased 
oil elsewhere than its proper source. It there- 
upon opened a rival retail establishment 
which undersold the other and destroyed it. 
The court allowed damages. " If competition 
be war," said the court, "in which every- 
thing is fair certainly the law will not give 
that doctrine its sanction. " IT And in an- 
other Iowa case in which furniture and not 
oil was concerned, the court was carried al- 
most to the point of lyricism in the ardor of 
its discussion. " Every man," it said, "has 
the legal right to advance himself before his 
fellows, and to build up his own business 
enterprises, and to use all lawful means to 
that end, although in the path of his impetu- 


ous movements he leaves strewn the victims 
of his greater industry, energy, skill, prowess, 
or foresight. But the law will not permit him 
to wear the garb of honor only to destroy. 
The law will not permit him to masquerade 
in the guise of honest competition solely for 
the purpose of injuring his neighbor." I2 

It is evident that in the oil case the touch 
of egotism which deprives malevolence of its 
disinterestedness was indubitably present, 
but the law as announced by the court de- 
clared the act to be illegal none the less, and 
there seemed to be no insuperable difficulty 
in enforcing the decision or in determining 
the conditions under which it could be ren- 
dered. However, this Iowa case is isolated. 
In general it may be said that courts will con- 
tinue to require as clear an instance as the 
barber-banker case before they will step in. 

It may be said, consequently, that the 
ethical standard assumed by the court to be 
good enough for competitors is not quite 
good enough for a large fraction of the public. 


Popular morality with or without economic 
justification condemns it. And in a measure, 
popular morality checks what the court has 
declared it will not or cannot do. The growth 
of chain stores is one of the most striking 
developments of retail business methods in 
recent years. Many of these establishments 
are quite able to carry out the process of 
sowing temporarily unprofitable prices in 
order to drive out competitors. They rarely 
do so in any systematic way and often their 
self-restraint is due to a disinclination to 
rouse the antagonism which such a procedure 
would bring with it. 

And we must not forget that the popular 
morality which is thus at variance with the 
law is also at variance with a somewhat more 
sophisticated morality. Evidently those who 
can successfully destroy competition in this 
severe, impetuous, or spirited fashion as 
learned writers in law journals have called it 
do not consider the practice immoral. 
Perhaps they distinguish between business 


morality and ordinary morality. But it may 
also be that they feel themselves justified on 
higher grounds. If we assume a teleological 
basis for conduct, it is quite possible to urge 
that the large business enterprises which are 
furthered by the elimination of financially 
weaker competitors are a sounder and better 
form of economic organization for the com- 
munity as a whole, and that the individual 
who suffers thereby must be dealt with as 
one of many casualties in the growth of a 
better system. We cannot do this, to be sure, 
and glorify competition in the abstract, but 
it must be said for the representatives of 
bigger and constantly bigger business that 
they do not profess to glorify competition, 
abstract or concrete. 

As far as the law has anything to say about 
it, it will let a bona-fide competitor drive 
away his rivals by any means that are not in 
themselves actionable that is, that would 
not be a legal wrong if applied to non- 
competitors. He must, however, be a bona- 


fide competitor and not be wreaking a per- 
sonal grudge. But the law has been less con- 
cerned with devices to get rid of one's rival 
than it has with the attempt to impersonate 

In this our racing analogy fails us com- 
pletely. It is not customary for a contestant 
to disguise himself as some one else and in 
that form win a prize which will be credited 
to another person. But in business this is so 
widely done that a whole body of institu- 
tions has grown up about it and a great deal 
of human cunning has been concentrated on 
effecting it. 

That fraud is wickedness and imposture 
villainy surely needs no proof. And if A 
dresses up his goods so that they will resemble 
B's, that is, to say the least, unethical. 13 
To the medieval mind, it was "false," 
"naughty," "deceyptfull." And the falseness 
and the naughtiness consisted first in the 
wrong perpetrated on the public in foisting 
poor wares upon them instead of good, and 


secondly in the slander and scandal this cre- 
ated against B. So, in 1391, it was enacted 
that fullers might not draw and pull Guild- 
ford cloth " which were of good making 
and of good value and did bear a great 
name" I4 because such acts caused " great 
deceit of the people. " Long before that, in 
1316, the potters complain of a sale of pots 
which resemble their own good wares, but 
are of bad metal. "By which roguery and 
falsehood the people are deceived and the 
trade aforesaid badly put in slander. " I5 And 
in 1592 the Privy Council heard favorably 
the petition of one John Godsall, of Taunton, 
who was a true maker of cloth, against some 
four persons who put John's marks on false 
clothes "in so much as theire [viz. John's 
and other true makers'] clothes which hereto- 
fore have ben well sold and esteemed of be- 
yond the seas by the deceipt of these badd 
persons are now greatlie dyscredyted." l6 

The fraud practiced on the public and the 
injury done the competitor's reputation were 


the basis of the jurisdiction the courts as- 
sumed and seemed to be the evil element in 
these practices. When trademarks slowly 
developed, from proprietary marks and 
police regulations, into an independent type 
of property, or something very like property, 
a new aspect was presented. Suppose the im- 
posture was as good as the thing it simu- 
lated? The public may be deceived in its be- 
lief as to the source of the goods, but it will 
not be injured. Nor will the credit of the 
trademark's owner suffer. It never seems 
to have occurred to the earlier courts that 
this was a possibility, and it never seems to 
have occurred to the four bad men at Taun- 
ton to make cloth as good as John Godsall's 
before they affixed his mark to their shoddy 
manufacture. Indeed, it is highly likely that 
they could not have made it so well as his 
with the best will in the world, although we 
must remember that our records are apt to 
be prejudiced in favor of the regularly con- 
stituted makers of cloth. 

OF GAIN 10 1 

It was through the Privy Council or the 
Star Chamber that the roguery of these 
knaves was to get its restraint or perhaps at 
the insistence of a member of the public who 
had received trash instead of good Coventry 

When monopoly ceased to be the natural 
state of things, it became a word of the evil- 
est omen, at any rate to the Common Law 
courts. To protect a trademark created a 
monopoly or seemed to. It was a long time 
before English courts were willing to find a 
property value in an indication of the source 
of commodities and protect it as such. It is 
now a. matter of course that a trademark will 
be protected, although courts are still con- 
fused and contradictory in their attempts at 
rationalizing their protection. 17 And how 
definitely property-like these things have 
become may be seen from the fact that the 
Merriam Company values the Webster 
name on its dictionaries at more than a mil- 
lion dollars, although scarcely a definition is 


put in even approximately the same words 
as Noah Webster used, and the Coca-Cola 
proprietors estimate that their mark is worth 
nearly ten millions. To use such valuable 
goods without the owner's consent cannot 
be defensible. 

And yet what in the older situations may 
well have been impossible is a not unlikely 
situation at the present time. The goods 
masquerading under a name not their own 
may be as good as those whose garb they as- 
sume indeed, they may be better. The 
public is not deceived nor the owner of the 
trademark scandalized except in so far as 
the public gets something it has not asked for. 
The medieval court would have shrugged its 
shoulders and, unless the Coca-Cola Com- 
pany was the recipient of a royal monopoly, 
would have been glad that the King's lieges 
had a double source of this health-giving 
beverage. The modern court is quite uncon- 
cerned with the question whether the infring- 
ing product is good or bad or whether its par- 

OF GAIN 103 

takers are put upon or not. If a particular 
mark is the Coca-Cola Company's mark, no 
one else shall use it, any more than any one 
else shall use the Coca-Cola's office equip- 
ment without its consent. 

Can there be any doubt as to the moral 
choice between the medieval and the modern 
attitude? If A has earned a reputation, ought 
there to be any question that B should not 
get the benefit of it, even if he is willing to do 
as well as A or better? But what if A has 
never really earned his reputation, never 
should have had it, has bought it by sheer out- 
lay of funds, or accidentally acquired it by 
being first in the field? What if the existence 
of A's reputation bars a better man from 
marketing a better commodity? That all 
this is not merely an academic possibility is 
evident enough if we remember the huge 
change that has been wrought in our eco- 
nomic life of advertising. 

A trademark is only one of many ways 
of indicating the source of some particular 


wares, and under existing law any method 
which passes off one man's goods as those of 
another is unfair competition and legally 
punishable. In theory and in history the 
value of a trademark depended on the quality 
of the goods marked, a quality which will be 
inferred as soon as the mark is seen. Now, 
there is no doubt that some famous trade- 
marks and trade-names became valuable 
property through a reputation acquired by 
use and approval, but we can hardly conceal 
from ourselves that in a great many cases the 
value of a trade-name is gained by having it 
dinned into our ears by countless broad- 
casting stations, flashed into our eyes from 
innumerable sign-boards, and introduced 
into our reading between the proposal of the 
hero and the tremulous "Yes" of the heroine. 
Certain investigations, of which the results 
may have been overstated, have rendered it 
extremely doubtful whether the success of an 
advertising campaign and the long-continued 
use of the advertised product is any guaranty 

OF GAIN 105 

of high quality or offers the purchaser as 
reasonable a return for his money as he would 
get otherwise. 18 It is quite true that this is 
not generally admitted, and particularly not 
by advertisers. Nor should I undertake to 
say that it is possible at the present day to go 
back to an economy in which advertisement 
is local and in which the consumer is compe- 
tent to judge the quality of what he buys by 
independent tests. But whether that is so or 
not, the sanctions of the law are demanded 
and are accorded purely on the plea that prop- 
erty is inviolable however acquired. 

We have accordingly a progress from the 
law, which sought to safeguard honest work- 
manship and to protect the public against 
fraud, to the law which prefers to justify it- 
self on the ground of property right in a 
reputation, whether it is deserved or not. 
And the difference follows, it seems to me, the 
difference in the moral judgments which 
were rendered in the matter outside the law- 
courts. The tribunals of the sixteenth and 


even the seventeenth century still thought of 
trade as an immediate relation between con- 
sumer and producer and were concerned with 
regulating both ends of it. Business ethics 
were directed to the creation of sound com- 
modities. Business reputation was valuable 
in that it guaranteed soundness and, as such 
a guaranty, a reputation would be protected. 
And their lordships of the Privy Council, 
great nobles as they were, took a personal 
and acute interest in the qualities of the 
things furnished them. They handled with 
their own hands the cloth provided for their 
cloaks and ran an expert finger along the 
edge of the swords they hung at their sides. 
They had no mind to be cheated and they 
did not wish their tenants to be. 

That regulation of the medieval and post- 
medieval sort did not make for freedom would 
not have troubled them. As late as 1666, Sir 
Orlando Bridgman, the Chief Justice, said 
that "A general liberty of trade without a 
regulation doth more harm than good." I9 And 

OF GAIN 107 

though the gilds had practically disappeared, 
the gild spirit was still too strong to make 
the notion of monopoly in any form either 
strange or distasteful to those whose spirit 
clung to feudalism. 

Indeed, these very gentlemen of Privy 
Council and Star Chamber were the chief 
traffickers and beneficiaries in the more pro- 
nounced monopolies which since the time of 
Elizabeth had become the standing symbol of 
tyranny and corruption. This incident of 
English economic history need not concern 
us particularly, except that it may explain 
why the law of the seventeenth century 
still primarily the utterance of a feudal no- 
bility found no repulsiveness in an idea 
which the rapidly growing towns took to be 
the chief obstacle in their progress. 

With the fall of the Stuarts, the sense of a 
breach with the last remnants of feudalism 
found expression in the courts. The law was 
as definitely set against all that savored of 
monopoly as the opinion of any tradesman 


could be. It was because of the danger in 
this direction that in the eighteenth cen- 
tury the great Chancellor Lord Hardwicke 
prone as he was to extend the jurisdiction of 
the Chancery declined to give the only 
effective remedy for the open violation of a 
trademark. Fraud was not alleged as far as 
the public was concerned and no legitimate 
business reputation was in danger. 20 

We may say that Hardwicke's judgment 
was near enough to what most men at that 
time might have felt to be right, except those 
whose marks were thus appropriated. As 
between the monopolistic powers which a 
successful trademark might create and the 
indubitable impropriety of stepping into 
another man's shoes while that other 
man still wore them it is likely that the 
choice would have seemed to be between two 
pretty undesirable citizens with the qualifica- 
tion that on the whole the infringer's mis- 
conduct was more conducive to public wel- 
fare. At any rate, business men did not grow 

OF GAIN 109 

restive under this situation till, in the nine- 
teenth century, the new conditions involved 
in large-scale production demanded access to 
larger and more remote markets and with it 
developed a technique of marking and ad- 
vertising for which the ancient legal sanc- 
tions were declared to be inadequate. 

That technique has created a new property 
value which is quite apart from the original 
purpose of any merchandising technique. It 
is a value which has been, as we have seen, 
estimated in terms of millions of dollars. 
How much of moral value it has depends on 
how well we succeed in balancing the possible 
public disservice of advertising against the 
general rule that to reap what one has not 
sown is difficult to defend on ethical grounds. 

But we have clearly traveled a long way 
from the merchant gild with its corporate 
monopoly and its rules of loyal competition 
among its members. Evidently if the gild 
notion were revived, it would have to be 
done on the monstrous scale of a national, or 


perhaps international, organization. This 
has been declared, not only feasible, but to 
be slowly taking shape. Whether so much is 
necessary before competition will learn man- 
ners and practice self-restraint, we may leave 




FOR the evils of competition if there are any, 
and for all other social defects if there are 
any, the same remedy is proposed by certain 
conservatives and by certain radicals. The 
conservatives call it merger, consolidation, 
absorption. The radicals call it socialism. 
The only difference is in determining into 
whose hands the administration of the no 
longer competitive industrial organization 
shall be entrusted. Shall it be a shop com- 
mittee, or shall it be the present managers 
and their successors selected by a process of 

In either case, the profession of middle- 
men, the merchants, will disappear. There 
will be distributing agencies of all kinds, 
but there will be no hagglers or chafferers, 


no advertisers and no unfair competitors. 
There will obviously be no business moral- 
ity. In fact, business will be essentially 
immoral and the function of the law will 
lie in emphasizing this. 

This may after all not happen, or it may 
happen incompletely. At any rate, what 
looms before us as the immediate economic 
future of the United States, if of no other 
country, does not permit us to envisage 
clearly the end of American industry as 
One Big Trust or One Big Union. It seems 
likely that merchandising will continue to 
occupy the energies of some millions of 
Americans, and, if competition is economic 
anarchy, that there will be a number of an- 
archists about us who are apparently not 
amenable to deportation. 

Varying moral judgments have been 
passed on certain business habits and the 
judgments have had a clear relation to the 
nature of the social organization in which the 
habits were exhibited. If we assume that 

OF GAIN 113 

there is to be no marked change in our social 
organization, we can see a definite movement 
toward making the moral judgments of to- 
day part of our actual business habits and in 
using the legal sanctions for bringing this 
result about. 1 

We should need no legal sanctions, no 
doubt, if we could be transported into that 
Chinese city on whose gate was painted the 
legend " Virtue is man's only jewel." It was 
the Sh&ig Tze Kuo, the Country of Gentle- 
men, described in the famous story of 
" Looking-Glass Flowers," Ching Hua Yuan. 
We read in Mr. Giles's translation: 2 

"By and by they arrived at the market- 
place where they saw an official runner 
standing at a stall engaged in making pur- 
chases. He was holding in his hand the 
articles he wished to buy and was saying to 
the owner of the stall, 'Just reflect a mo- 
ment, sir, how impossible it would be for me 
to take these excellent goods at the absurdly 
low price you are asking. If you will oblige 


me by doubling the amount, I shall do my- 
self the honor of accepting them/ " 

The student T'ang, however, who tells us 
all this, appears to have been the last person 
who knew the way to the Country of Gentle- 
men, and the injunctions and penalties, 
rescissions and damages, which we use in 
regulating purchase and sale have a much 
more modest purpose than the elaborate 
self-abnegations of that strange place. Still, 
an eminent economist, the late Alfred 
Marshall, thought that chivalry in com- 
petition could be attained by voluntary 
cooperation on the part of competitors, and 
apparently the suggestion is not an impos- 
sible one. 

However, since competition whether 
chivalrous or not is likely to continue for 
an indefinite time, it is fairly certain to be a 
controlled competition. Yet it is hard to see 
how any control which has any chance of 
being carried out in the United States will 
deprive a certain number of economic groups 

OF GAIN 115 

of the power they have already attained or 
even prevent an appreciable increase of that 

In relation to this power, moral and legal 
problems arise which make the dishones- 
ties, greed, or competitive trickery of mer- 
chants eager to sell their goods profitably 
seem petty and insignificant enough, almost 
as petty as the operations of the ancient 
huckster, the KaTnjXos, seemed in the eyes of 
the great merchant, the epiropos. The con- 
ditions of modern life have created a social 
situation in which the responsibility of the 
merchants as a class is quite new. 

The ancient merchant, Greek or Roman, 
might well be a speculator and a forestaller 
and might well consider, in the sweep of his 
commercial vision, British tin and Indian 
cotton. But the power he obtained by this 
sometimes huge wealth he hoped to exercise 
at leisure after withdrawing from commerce. 
The medieval merchant expected to die a 
merchant. He was a member of his class, 


and the power he exercised eagerly and am- 
bitiously was the corporate power of his gild. 
But until the Renaissance his political vision 
rarely went beyond the city he was proud to 
govern, and it seems likely enough that the 
thought of a permanent and nation-wide 
control of any commodity by a single person 
or a single group, was as abhorrent to him as 
to his fellow citizens. 

We must remember that, however re- 
stricted the name merchant has become, the 
mercantile idea to-day covers a far greater 
range of activities than in either ancient or 
medieval times. Some of those whom we call 
industrialists and manufacturers, even grow- 
ers and miners, would in medieval times 
have seemed to be merchants. A modern 
great producer does not himself manipulate 
his material or even direct its manipulation. 
He arranges for the creation of the products 
in factories over which he exercises a financial 
control, and he concerns himself primarily 
with the disposition of the factory's output. 

OF GAIN 117 

The directors of our great wool companies 
could not themselves shear a sheep or card 
a fleece. 

These men are, therefore, dealers in the 
medieval sense, but on a scale that would 
have astounded the Greeks and terrified 
the Middle Ages. It is not too much to say 
that the material goods necessary for ele- 
mentary living, of the whole community 
could, by existing and certainly by immi- 
nent combinations of merchants, in this 
larger sense, be so dealt with as to reduce all 
the rest of the community to the condition 
of a wage-earning and wholly dependent 
class. It would be difficult by legal sanctions 
to prevent a new type of merchants' gild 
from constituting itself the de facto masters 
of the community, if they earnestly desired 
to do so. 

The entertaining of such a purpose and 
its execution present the larger moral pro- 
blem to which I have referred. It is impos- 
sible to sever economic power from political 


power. Those who have the one inevitably 
have the other, although clearly enough 
there is no constant and permanent ratio 
between the two. If the political power is 
persistently and systematically exercised to 
the end of increasing the economic power, 
we may reach a situation which at the pre- 
sent time most Americans morally condemn. 
And political power is in close association 
with legal power. Business men must some 
day determine the morality of political and 
legal action directed to the maintenance 
solely of their own prosperity either indi- 
vidually or as a combination. Doubtless 
there are many who will readily convince 
themselves that what is good for them is good 
for the country and the world. It may well 
be. But when Adam Smith found that, by a 
preestablished harmony, selfish desire for 
gain produced general human progress, he 
made Preestablished Harmony the duly 
wedded wife of Laissez Faire, of Free Com- 
petition. 3 There seems to have been a 

OF GAIN 119 

divorce in this happy union. That merging, 
consolidating, absorbing, is a form of Free 
Competition will to-day be urged only in 
briefs of lawyers resisting the application of 
the Sherman Act. 

The world has not yet recovered from the 
economic and social disaster of four years 
of wanton destruction. What the face of 
the world will be within the next two 
decades, those may tell who know. But in 
the United States there will very likely be 
an increase of the power now wielded, in 
respect of law as of government, by organ- 
izations which are essentially groups of 
merchants super-merchants, no doubt, 
but not lifted out of that designation. These 
men will need no inconsiderable moral forti- 
tude for the proper direction of their efforts. 
It is unfortunately not probable that they 
will be much guided in advance by the ac- 
credited representatives of the law. 



1. De Agricultura, Praef. mercatorem autem strenuum 
studio sumque rei quaercndae existimo; verum, ut supra 
dixi, periculosum et calamitowm. 

2. Ecclesiasticus, 26, 20 (29). The passage occurs 
only in the Greek. The Hebrew text for this chapter is 
not extant. Cf. also Schechter, S., Studies in Judaism, 
2nd Series, pp. 72 seq. For the older Jewish doctrine, 
cf. Hosea 12, 7, "He is a merchant: balances of deceit 
are in his hand"; and for the later view to the same 
effect cf. Schechter, S., I.e., who quotes the Babylonian 
Talmud, Erubin, 55b, and Kiddushin, 82a. 

3. Cf. Thurnwald, R., s.v. Handel, 8 and 9, in 
Reallexikon der Vorgeschichte (1925) 5, 78-81; Moszkow- 
ski, Vom Wirtschaftsleben der primitiven Volker (1911); 
Problems der Weltivirtschaft, 5. 

The foreign character of the merchant class is still 
their prominent characteristic in the eyes of Hippo- 
damus of Miletus in the late fifth-century if the pas- 
sage is genuine (Stobseus, Florilegium, XLIII, 93), with 
whose condemnation we may contrast the approbation 
of Xenophon in his little book on Revennes of Athens, 
II, I, IV, 40. We may further compare the list of for- 
eign merchants in Knorringa, H., Emporos, Data on 

122 NOTES 

Trade and Trader in Greek Literature (Amsterdam, 
1926), pp. 79seg. 

4. The ordinary word for merchant in the Old Testa- 
ment is "Canaanite" in the Hebrew text. Cf. Proverbs 

3i 2 4- 

5. There is a spirited controversy on the role played 
by the Phoenicians in Homeric commerce in which 
M. Victor Berard's book, Les Pheniciens et I'Odysee, is 
much discussed. Opposing views are common, es- 
pecially those of Beloch, Griechische Geschichte, I, 2, 
pp. 66 seq. 

The more popular view is to deny that the Phoeni- 
cians were the chief traders in Homeric times. (Cf. 
Seymour, T., Life in the Homeric Age, p. 61 .) But in the 
period directly after Homer, there can scarcely be any 
doubt that the Sidonians controlled the carrying trade. 
For ^Egsean times, cf. Glotz, Gustave, The Mg&an 
Civilization, ch. IV. For the Phoenicians as masters of 
the Egyptian trade, cf. Scylax, Periplus, p. 94, Herodo- 
tus, I, I, 2, 41; Thucydides, IV, 53, 3; Strabo, XVII, 
792, 801-02. 

6. Just how fully ancient commerce was developed 
is a matter which has in recent times aroused consid- 
erable discussion. Of modern investigators, Julius 
Beloch and Eduard Meyer have dwelt much on the 
economic development of the ancient world and have 
been inclined to treat this development as comparable 
to that of our own times. Their chief opponent in Ger- 
many has been the economist, Karl Biicher, who re- 

NOTES 123 

turns to the lists with vigor in his Beitrdge zur Wirt- 
schaftsgeschichte (Tubingen, 1922), especially pp. 92-98. 
It will hardly be necessary to take a position on these 
questions here. Professor Biicher is in a distinct 

7. Iliad, VI, 235-36. 

8. For the notion that commerce was generally con- 
demned in antiquity, we may note the ordinary hand- 
book, Espinas, Histoire des doctrines economiques, p. 46; 
Kautz, Gesch. Entwickelung der National-Oekonomik, 
pp. 59 seq. In Ingram's History of Political Economy 
(1923), the theories of Aristotle and Plato (pp. 10-17) 
are treated as typifying Greek economic thought. 

9. Franco tte, H., L' Industrie dans la Grece ancienne 
(1900), I, pp. 1 8 seq.] Huvelin, P., in Daremberg and 
Saglio's, Dictionnaire des Antiquites, 3, pp. 1743-69; 
Cagnat and Besnier, ibid., pp. 1769-83. For the 
Roman Empire. Otto, W., Kulturgeschichte des Altert. 
(1925), pp. 77 ff.; Buchsenschiitz, B., Besitz und Ewerb 
in klass. Altertum., pp. 275 seq 

10. For the position of merchants in Greece, cf. 
Huvelin, P., s.v. mercator, Daremberg-Saglio, Diet, des 
Antiquites, 3, pp. 1731-36, and s.v. negotiator, ibid., 
4, pp. 41-45; Souchon, Aug., Les Theories Economiques 
dans la Grece Antique (1898), pp. 87 seq.\ Knorringa, H., 
Emporos, Data on Trade and Traders (Amsterdam, 
1926); Thucydides, II, 40, 1-2; Plutarch, Pericles, 19. 

11. Mr. A. A. Trever's dissertation, A History of 
Greek Economic Thought, gives a very full discussion of 

i2 4 NOTES 

the Greek doctrines in the subject and discusses fully 
the important and interesting dialogue, Eryxias (pp. 
I3$seq.), which is also given in full in the admirable 
collection of documents on Greek Economic Thoitght, by 
M. W. Laistner; cf. further, Calhoun, George M., The 
Greeks and the Evolution of Standards in Business. 

12. Plato, Laws, XI, 9i8a~92Oc; Aristotle, Politics, 
VI, 4, 12; VII, 7, 3. A Phaeacian certainly looked upon 
trade with contempt as compared with war (Homer, 
Od. VIII, 159), but we do not know how general Homer 
meant this judgment to be, and the Phseacians may 
have preferred downright piracy. But cf. Od. XIII, 
291 seq. Cf. in general, Weber, Max, Zur "Okonom- 
ischen Theorie der antiken Staatenwelt" in Aufsdtze zur 
Sozial- and Wirtschaftsgeschichte (Tubingen, 1924), pp. 


13. Cf. V. Tscherikower, Die Hellenistischen Stadte- 
grundungen von Alexander dem Grossen bis auf die 
Romerzeit (Philologus, Supplementband XIX, Heft I), 
Leipzig, 1927. This is the first detailed examination of 
this interesting topic since Droysen's history of eighty 
years ago. 

14. Cicero, De Officiis, I, 42, 151 : mercatura autem si 
tennis est sordida putanda est; sin magna et copiosa 
non est admodum vituperanda, atque etiam videtur iure 
Optimo posse laudari. Still, an ancient law forbade sen- 
ators to engage in foreign commerce on a large scale. 
(Livy, XXI, 63, 3.) That may, to be sure, have had a 
political motive. 

NOTES 125 

15. In Cicero we already find the assumption that 
to resell what one has just bought cannot possibly be 
done honestly. (De Officiis, I, 42, 150.) Sordidi etiam 
putandi qui mercanlur a mercatoribus quod statim ven- 
dant. Nihil etiam proficiant, nisi admodum mentiantur 
nee vero est quicquam turpius vanitate. 

1 6. Statutes against forestalling in England began at 
least as early as 25 Edward III, St. 4, c. 3. The offense 
was more precisely defined by 5-6 Ed. Ill, c. 14, 1-3, 
in 1551-52. Cf. Holdsworth, W. S., A History of 
English Law, IV, 375 seq.; Ashley, W. J., Economic 
History, I, 182 seq. The name occurs in Britton and 
Fleta, 2, 12, 28. Cf. Ducange, Glossarium, s.v. Foris- 
tallare. The Continental legislation on the subject was 
less definite and specific than in England. Cf., however, 
Consuetudines Bituricenses, Thomasserius, p. 338, 
quoted by Ducange, I.e. 

17. The offenses of forestalling and regrating were 
still legally forbidden in Blackstone's time, Comm., 
IV, 158-59, and were not formally abolished till 1844, 
7-8 Viet., c. 24, i. In the United States these offenses 
were merged in the general prohibition of monopolies. 
Cf. Standard Oil Co. v. United States, 221 U.S. I, and 
State v. Duluth Board of Trade, 107 Minn. 506, 526. 


I. Roger North, Autobiography (ed. Jessopp, 1887), 
pp. 131-32, quoted in Kittredge, G. L., Witchcraft, 

126 NOTES 

PP- 3~4- Cf., also, in this same limitless repertory, 
pp. 25 seq. We find warnings against popular judgment 
on this question in Bernard, A Guide to Grand-Jury 
Men (2nd ed., 1629), pp. 23-25, quoted by Kittredge. 

2. The law itself recognizes that there is a stage be- 
yond justice when, in the preamble to Elizabeth's second 
statute against fraudulent conveyances (25 Eliz., c. 5), 
we read; "not only to the let or hindrance of the due 
course and execution of Law and Justice; but also to 
the overthrow of all true and plain dealing between 
man and man." 

3. Wilson, Thomas, A Discourse Upon Usury (New 
York, 1925). This new edition by Mr. R. H. Tawney 
contains an admirable introduction on usury in England 
which is probably the best historical treatment of the 
subject. Wilson's treatise is a mine of information for 
the general attitude toward trade and finance at the 
close of the Middle Ages and is in addition an invaluable 
picture of manners. It will be frequently referred to. 

4. The material on execution against the person in 
Greek law is completely gathered with a full bibli- 
ography in Weiss, Egon, Griechisches Privatrecht, Die 
Personalexekution, pp. 495-531. For the extent to 
which this is found throughout the world, we may 
refer to Kohler-Wenger, Allgemeine Rechtsgeschichte 
(1914), p. 291. It is important to note that among 
many primitive people this form of enforcing a debt does 
not exist. Cf., in addition to the references there given 
Ankermann, Bernhard, Das Eingeborenenrecht. Osta- 

NOTES 127 

frika (1929), p. 370. For Rome, we may refer to Buck- 
land, W. W., A Textbook of Roman Law, pp. 615, 639; 
Wenger, Institutionem des rom-Prozessrechts (1925), 
pp. 213-26. Cf. my article on the execution under the 
law of the Twelve Tables, Partis Secanto, Am. J. of 
Phil. 43, 32-48. For medieval law cf. Brissaud, Jean, A 
History of French Private Law (Cont. Legal Hist. Series, 
1912), pp. 564 seq.\ Stammler, Rudolf, Detitsches Rechts- 
leben (1928), I, p. 364; Engelmann, Arthur, A History 
of Continental Civil Procedure (Cont. Legal Hist. Series, 
ed. Millar, 1927), pp. 168, 172. The Canon Law forbade 
debt-servitude (Decretals, X, De Pign. 3, 21, 3), but 
imprisonment for debt was permitted and was common 
(Engelmann, op. cit., pp. 490-91). 

5. The abuses of imprisonment for debt were por- 
trayed in several of Dickens's novels, especially Pick- 
wick Papers and Little Dorrit, and these pictures power- 
fully aided in the abolition of the system. 

6. Body arrest for default in payment of a debt was 
abolished in England in all but six enumerated cases by 
the Debtors' Act of 1869. The excepted cases are 
largely concerned with the violation of a fiduciary duty. 
In the United States most constitutions and many 
statutes have specifically abolished imprisonment for 
debt, but in many States, imprisonment for debts arising 
out of torts i.e., civil wrongs is permitted, and 
the difference between a civil wrong and the breach of a 
contractual obligation is not always easy to discover. 

7. These matters are highly controversial topics of 

128 NOTES 

ancient history. There is no agreement among his- 
torians in detail, but the general effect of the situation 
created by Solon seems to be clearly what I have stated. 
The importance of the tribunician power in the re- 
striction of debt-servitude lessened when the tribunician 
office was practically controlled by the senatorial 

8. The most recent treatment of the subject is to be 
found in Levet, Le Benefice de Competence (Grenoble, 
1927). P. P. Zancucchi, in his article, Sul cosidetto 
beneficium competently , Bull, del Inst. di Dir. Rom. 29 
(1916), pp. 61-103, vigorously presents one side of the 
issues which have been raised in connection with this 
institution. The question is whether it was in reality a 
qualified discharge or merely a temporary exemption 
of necessaries from execution. Cf. further, Wunsch, 
Zur Lehre vom ben. com p. (Leipzig, 1897). A full history 
of the subject is given in Zipperling, Albert, Das ben. 
comp. in romischem Rccht, Pt. I (Marburg, 1906). 

9. The list of cases in which the beneficium compe- 
tentice was permitted is given by Buckland, W. W., 
Text-Book of Roman Law, pp. 687-88. The most char- 
acteristic statement of it in the sources is Dig. 50, 17, 
173. The phrase seems to be no older than the seven- 
teenth century, Altmann, Das beneficium competentia 
(1888), p. 48. There was a somewhat similar practice 
in Ptolemaic Egypt; VVenger, Leop., Archiv. f. Pap., 
II, 494 seq. 

10. Cicero quotes it as a well-known proverb, De Off., 

NOTES 129 

I, 33. It had already appeared in a slightly different 
form in Terence, Heant., V, 796. We find its substance in 
Gaius, Dig., IV, 30, and in a phrase of Celsus, D., 6, 1 , 38. 
The importance of the idea and its development is traced 
in an admirable paper of Johann Stroux, Summum ius 
summa iniuria, in Festschrift fur Speiser-Sarasin (1926), 
translated by Funaioli, with a preface by S. Riccobono; 
Ann. sem. Giur (Palermo), XII, 639-91. 


1. Ulpian, Liber Singularis Reg., II, n ; Dig., I, 12, I, 

II. The elaborate discussion of the phrases iustum 
pretium and iusta (Estimatio by E. Albertario, in Bull, del 
1st. di Dir. Rom., XXXI (1921), pp. 1-20, is an illus- 
tration of method rather than an historical examination. 
The expression iustum pretium is used by Gaius, Dig., 
30, 66; and is quoted by Ulpian from some previous 
imperial decree, Dig., 47, n, 6, pr. 

2. Plato, Laws, 917, c d e. 

3. For a sympathetic presentation of the medieval 
doctrine of the just price, cf. O'Brien, George, An Essay 
on Medieval Economic Teaching (London, 1920), pp. 

4. Cf. the discussion in Ashley's Economic History 
(1892), ch. Ill, pp. 132-48. The late President Had- 
ley's little volume, Standards of Public Morality, may 
be said to represent economic orthodoxy on this subject. 
The "just" price of the schoolmen was of course a dif- 

1 3 o NOTES 

ferent thing from the " natural" price of Adam Smith 
(Wealth of Nations, I, ch. VIII); or the "fair" price of 
modern adjustments. The determination of a fair value 
of corporate property is particularly pressing in matters 
of modern public administration; cf. the Rating and 
Valuation Act of 1925 in England, and the struggles of 
the United States Supreme Court in rate cases. A 
recent discussion will be found in Bonbright, J. C., "The 
Problem of Judicial Valuation/' 27 Col. Law Rev., 
493-522, and Bemis, E. W., "Going Value in Rate 
Cases," 27 Col. Law Rev., 530-46. For the whole subject, 
cf. Eddy, A. J., The New Competition, pp. 242-78. 

5. They were Pomponius (2nd century), cited by 
Ulpian, Dig., 4, 4, 16, 4; and Paul, Dig., 19, 2, 22, 3. 
Mr. Hadley (op. cit., 35) misses the point of the word 
circumscribere, which Ashley (Economic History, pp. 
132-33) understands somewhat better. Both jurists 
are stating the law, not approving it. But Cicero 
treated freedom of bargaining as an axiom established 
by ancient usage (Verr., IV, 5, 10): maiores nostri 
putabant ereptionem esse, non emptionem, cum venditori 
suo arbitratu vendere non liceret. 

6. The principle is apparently set forth in a consti- 
tution of Diocletian of the year 285 A.D. (Code Just., 4, 
44, 2.) Cf. my Textbook of Roman Law (1927), pp. 233- 
35. It is generally believed to be of later origin, but 
that is after all not quite certain. Its late character is 
especially maintained by Solazzi, S., L'origine storica 
della rescissione per lesione enorme, Bull, del 1st. di Dir. 

NOTES 131 

Rom. XXX (1921), pp. 51-87. For varying opinions as 
to what the late Roman doctrine really covered, cf. 
Krall, Walther, Die Anfechtung der Vertrage wegen 
laesio enormis (Bonn, 1896). Even if the institution is 
later than Diocletian, a departure from the old Roman 
principle as stated by Cicero had certainly occurred in 
the third century. Diocletian had published an Edict 
of Prices, in which the maximum to be charged for any 
commodity was fixed. Corp. Inscr. La/., Ill, 801; 
Blumner, Pauly-Wissowa, Realenz., V, 1948 ff. (also 
a separate edition of the Edict by Blumner in 1893). 
An economic commentary is given by Karl Biicher, 
Beitrdge zur antiken Wirtschajtsgeschichte (1922), 
pp. 179-89. It seems to be the only attempt to do in 
ancient times what was so frequently done in the 
Middle Ages. The fixing of a price at which goods must 
be sold to the government was, however, fairly com- 
mon. Cf. Revenue Laws of Philadelphus (1896) and 
Wilcken, U., Griechische Ostraka, I. The Edict of 
Prices is represented by Lactantius (De Mortibus Perse- 
cutorum, ch. 7) as a desperate attempt to combat a 
desperate situation. 

7. French Civil Code, 1674-83. German Civil 
Code, BGB, 138; Swiss Code of Obligations, 21. 
Cf. Dijol, Marcel, La Justice dans les Contrats et les 
Obligations Lesionnaires (Paris, Sirey, 1918). 

8. White v. Damon, 7 Ves. 30; Underhill v. Honvood, 
10 Ves. 209. 

9. Cockell v. Taylor, 15 Beav. 103. 

i 3 2 NOTES 

10. Cf. the cases collected by Pomeroy on Equity 
Jurisprudence (2nd ed.), 2212 seq. There are still a 
number of American States which hold the contrary, in 
some cases in accordance with special statutes embody- 
ing the more equitable rule. (California, Civ. Code, 

339i I-) 

11. Coles v. Treco thick, 9 Ves. 246. Sir Samuel 
Romilly had argued for the same doctrine as an advo- 
cate (Titly v. Peers, 10 Ves. 301). 

12. Abbot v. Sworder, 4 De G. and Sm. 448, a de- 
cision by Vice-Chancellor Knight Bruce. In California, 
under the statutory rule, two thousand dollars was held 
inadequate as consideration for a house worth eight 
thousand and renting for thirty-five dollars a month. 
(O'Hara v. Lynch, 172 Cal. 525, 157 Pac. 608.) But not 
a case in which the disparity was one thousand dollars 
in a total value of twenty thousand. (Schader v. White, 
173 Cal. 441, 1 60 Pac. 557.) 

13. Wood, H. G., "The Influence of the Reformation 
of Ideas of Wealth and Property," in Property (1915), 
pp. 135-67; and especially, Troeltsch, Ernst, Die 
Soziallehre der christlichen Kirchen und Gruppen (1912), 
pp. 1270.; 705 ff.; 720 ff.; J. S. Schapiro, "Social 
Reform and the Reformation" (1909), Studies in His- 
tory, Economics, and Public Law, vol. 34, pp. 20-39. 

14. For traffic in money in ancient Mesopotamia, cf. 
Lutz, H. F., " Money and Loans in Ancient Babylonia," 
Un. of Calif. Chron. (April, 1924), pp. 125-44. 

15. Aristotle, Politics, I, 10 (1258 c.); Nic. Eth., 4, 3, 
1 1 21 b 34. 

NOTES 133 

16. De Aere Alieno Vitando, Plutarch's Moralia, X, 
827 d seq. Wilson in the Dialogue on Usury makes much 
of Plutarch's authority (p. 333), "Thus farre Plutarche 
that great lerned Clarke." 

17. "The ordinary Athenian citizen hates money- 
lenders," is stated in Demosthenes against Pantaenetus, 
52, 981. Demosthenes deprecates such an attitude in 
this speech, but in the first speech against Stephanus 
(69-70, 1122-23) if it is by Demosthenes he uses 
the odium of money-lenders effectively. Cf. Alci- 
phro, Epistles, I, 26, III, 3, 2. 

1 8. For money lent at interest in Ptolemaic Egypt, 
cf . Robiou, Felix, Memoire sur r&conomie Politique 
au temps des Lagides (Paris, 1875), pp. 99 seq. A Delphic 
law of the fourth century limited interest to 6 (or 8^) 
per cent as an emergency measure. Homolle, Th., 
La loi de Cadys (B. C. H. 1926), 3-106. 

19. Plato, Alcib. I, 18. Posidonius ap. Athenaeum, 
Dipnos., VI, 24; Fustel de Coulanges, s.v. Laced&moni- 
orum Respublica, in Dar.-Saglio, Diet, des Ant., Ill, 

20. Interest at Athens, as generally in Greece, was 
free. A law of Solon specially so provided. Lysias, c. 
Theomnestus (X), 18. 

The effect of the Solonic seisachtheia was contro- 
verted even in ancient times. (Plutarch, Solon, 15.) 
Cf. Billeter, Gesch. des Zinsfusses, pp. 5 seq. ; Linforth, 
I; Solon the Athenian, pp. 269-74. (Un. of Calif. Publ. 
in Class. Philology, 6, 1919.) A similar revolutionary 

i 3 4 NOTES 

measure took place at Ephesus. (Waddington, Inscr. 
dc VAsie Mineure, No. 136 A.) 

21. The story is told that, in the time of Agis, all 
records of debts were publicly burned. (Plutarch, 
Agis, 13.) 

22. The Lex Cenucia was passed in that year, after 
the rate had been at least three times fixed by previous 
statutes. Livy, VII, 42; Appian, Bell. Civ., I, 54. Cf. 
Rotondi, G., Leges Publicce Populi Romani, p. 226; 
Klingmiller, Zeit. der Sav. St. (rom. Abt.), 23, 72 seq., and 
article jenus in Pauly-Wissowa, VII, 2187 seq.', Cuq. 
Ed., Institutions juridiques, I, pp. 118-20. Cf. also 
Baudry, s.v. Foenus, Dar.-Saglio, Diet, des Ant., 2, 
1214 seq. 

Some writers have supposed that what Genucius 
prohibited was compound interest. That is contra- 
dicted by our sources and supported only by a curious 
unwillingness to admit the possibility of a statute laps- 
ing by desuetude. 

23. Cato, De Agricultura, Prcef. Cf. also the story 
in Cicero, De Officiis, II, 25, 89. Cicero himself is a wit- 
ness to the unpopularity of money-lenders (De Officiis, 
I, 42, 152), where they are grouped with the tax-col- 
lectors, the publicans of the New Testament. And yet, 
without any expressed disapproval on Cicero's part, his 
most intimate friend, Atticus, lent money at high rates 
of interest. 

24. Plutarch, Cato Major, c. XXI. 

25. In Cicero's time, the accepted maximum was 

NOTES 135 

12 per cent, the centesimce usurce, i per cent per month, 
just as it was generally in Greece. Ep. ad Alt., I, 12, 5. 
The usual pate was from 4 to 8 per cent per year. 
Cicero, ad Alt., 4, 15, 7; ad Q. Fr., 2, 14, 4. Columella, 
De Re Rustica, 3, 3. 

26. Cod. Just., 4, 32, 26, Nov. 32 and 34. There is a 
dubious reference to an attempt by Alexander Severus 
to limit interest to 4 per cent. (Lampndius, Alexander, 
2, 6.) Cf. Cod. Theod., II, 33, I. 

27. The most complete discussion of interest on 
money in classical antiquity is to be found in Billeter, 
Geschichte des Zinsfusses im Altertum, already quoted. 

28. In his Liber de Tobia, Migne, Patrologia Latina, 
vol. 14. 

29. For the attitude of the Church toward usury be- 
fore Constantine, cf. G. Uhlhorn, Die Christliche Lie- 
bestatigkeit in der alien Kirche (1882), I, pp. 376ff.j 
Dopsch, Alfons, Grundlagen der europaischen Kulturent- 
ivickelung, II (2nd ed., 1924), pp. 227 seq., who quotes 
Fedor, Das Christliche Zinsverbot (Festg fur Finke, 
1904), p. 139, and Schaub, F., Der Kampf gegen den 
Zinswucher, ungerechten Preis und unlauteren Handel im 
Mittelalter (1905), p. 33. See also Funk, s.v. Wucher, in 
F. X. Kraus, Realenz. des Chr. Altertums, and J. Dow, 
s.v. Usury, Hastings, Enc. of Rel. and Ethics, XII, 
550 seq. 

30. Cf. Tawney's Introduction to Thomas Wilson, 
Dialogue on Usury (1925), pp. 16-172. The Swabian 
J. Pflaumer, in his Colloquium von Etlichen Reichstag- 

136 NOTES 

Puncten, written after 1641, illuminates the popular 
situation in Germany as much as Wilson's book does 
that of England. The edition of 1893 contains an excel- 
lent introduction by Eberhard Gothein, pp. i-xcvii. 
Johannes Janssen, Geschichte des Deutschen Volkes 
(i6th ed.), I, pp. 384-450, and E. Michael, Geschichte 
des Deutschen Volkes (1897), I, pp. 162-204, present a 
vivid picture of the economic conditions of Germany at 
the close of the Middle Ages, but one that is somewhat 
colored by controversial needs. 

31. Wilson, Thomas, op. tit., p. 234. 

32. Cf. the lists in Ryan, F. W., Usury and Usury 
Laws (1924). Mr. Ryan and many others advocate the 
abolition of all usury laws and the substitution of Small 
Loan Acts in their place. 

33. Coffin, William Tristan, "Usury in California," in 
16 California Law Rev., pp. 281-97, 387-424. 


1. Com. v. Waner, 6 Mass. 72; State v. Sampson, 
10 N.C. 620; Com. v. Springer, 8 Pa. Co. Ct. R. 115. 
But cf. State v. Reiff, 14 Wash. 664, 45 Pac. 318. 

2. We may refer to any textbook on the law of sales. 
Much the fullest in the cases quoted, is Williston on 
Sales (2nd ed., 1924), I, pp. 195-210; 624-30. 

3. Cf . the glowing tribute to the common law practice 
by the Supreme Court in the case of Barnard v. Kellogg, 
10 Wall. 383, 388. 

NOTES 137 

4. Labeo, quoted by Ulpian, Dig., 4, 3, I, 2. Cf. also 
Dig., 1 8, 1,43, 2- 

5. Buckland, W. W., A Text-Book of Roman Law, 
pp. 488-89. The edict does not appear to have been 
general in the time of Cicero and Varro, but already 
covered slaves. (Cicero, De Off., 3, 17, 71; Varro, 
de R. R., 2, 2, 2, 5.) For the edict and its terms we may 
compare Dig. 21, i, in general, and Lenel, 0., Edictum 
Perpetuum (3rd ed., 1927), pp. 554~68. 

6. Ashley, W., Economic History, Book I, pp. 140-47; 
Endemann, Studien in der rom.-can. Wirtschafts- und 
Rechtslehre, II, 37; Aquinas, Summa, 2, 2, q. Ixxvii, 
art. 2; J. B. Corradus, Resp. Cas. Q., 51, p. 66. 

7. It must, however, be mentioned that in the medi- 
eval Common Law, mistake and inadvertence and even 
ignorance were not without protection, even when there 
was no fraud. It was said : Deus est procurator fatuorum, 
Y. B., 8 Ed. IV, Pasch. pi. n; Holdsworth, Hist, oj 
English Law, V, 292. 

8. Cro. Jac. 4 (1625). 

9. Trollope, Anthony, Phincas Redux, III, 71. 

10. Most Common Law courts are, of course, aware 
of the difference between the Common and the Civil 
Law in this respect: Hargous v. Stone, 5 N.Y. 73, 81. As 
for the Latinity, cavere regularly means to give security, 
and the normal meaning of caveat emptor would be, " Let 
the buyer give security." Sibi cavere would carry some 
of the implication intended by the Common Law 

138 NOTES 

1 1 . The rules of implied warranty in the English Sale 
of Goods Act, 14, and the American Uniform Sales 
Act, 15, have seriously modified the doctrine of caveat 

12. Advertising has no inconsiderable history. Cf. 
Cronau, Rudolf, Das Buck der Reklame (1887). Wolff, 
F., and Crisolli, K., Das Recht der Reklame, 1929; Hand- 
ler, M., Fake and Misleading, Advertising, 39 Yale Law 
Journ. 22. Mr. Giuseppe Castelli has promised a book 
on the whole subject (// ricliiamo [La reclame] nelle 
ragioni psicologiche, storiche, morali estetiche, economiche 
[G. Barbera, Florence]), which I have not seen. His brief 
article on La "Reclame" nelV antichita (Riv. d' Italia, 
1915, 1 8, pp. 889-902) makes evident enough the wide 
gulf between ancient attempts and modern accom- 
plishments. I may add two other studies which I have 
also been unable to procure: Paneth, E., Entwickelung 
der Reklame, and Zur Westen, Walter v., Antike Reklame 
(Ex Libris, 35), pp. 28-36. 

13. 84 NJ. Eq. 469, 94 Atl. 570. 

14. 89 NJ. Eq. 149, 102 Atl. 1 6. 

15. Le Blume Import Co. v. Coty, 293 Fed. 


1 6. 3 Fed. (2nd), 891. 

17. Leather Cloth Co. v. Am. Leather Cloth Co., 
II H.L. Cases 523 (1863). 

1 8. Contrast Newman v. Pinto, 4 R.P.C. 508, 57 
L.T. 31, with Hargreaves v. Freeman (1891), 3 Ch. 39, 
8 R.P.C. 237. Only malice would note that in the 


former case the cigars were of German manufacture and 
in the latter, of British. 

19. California Fig Syrup Co. v. Taylor's Drug Co. 
(1897), 14 R.P.C. 341. 

20. Worden v. California Fig Syrup Co., 187 U.S. 
516 (1902). 

21. Sears Roebuck & Co. v. Federal Trade Com- 
mission, 258 Fed, 307 (1919). 

22. 4 Fed. (2nd), 759 (1925). 

23. Federal Trade Commission v. Bradley, 31 Fed. 
(2nd), 569. 

24. The first section of the German U.W.G. deals 
with false representations by advertisement and makes 
them penal. Cf. Barczinski, Arthur, Reklame und 
Recht, 1909; Weltner, Anton, Unlauterer Wettbewerb in 
Reklameschriften (Koln, 1928). 

25. Prov. 27, 2. 

26. Royal Baking Powder Co. v. Federal Trade 
Commission, 281 Fed. 744; Royal Baking Powder Co. 
v. Donohue, 265 Fed. 406. 

27. The following may be taken to be examoles: 
Adams, Henry Foster, Advertising and its Mental 
Laws (New York, 1920); von Hartungen (Herting), 
Ch., Psychologie der Reklame (2nd ed., 1926); Calkins, 
Earnest Elmo, The Business of Advertising (New York, 
1915); Russell, Gilbert, Nuntius (To-Day and To- 
Morrow) (New York, 1926). 

140 NOTES 


1. The movement for arbitration in commercial dis- 
putes is an outgrowth of that aspect of business ethics 
which concerns the relations of merchants as a group to 
others in the same group. It is too vast a subject to be 
considered incidentally. As a sign-post in the field, a 
little book by Mr. C. F. Birdseye, Arbitration and 
Business Ethics (New York, 1926), may be cited. Even 
a selected bibliography would almost necessarily num- 
ber hundreds of items. It is perhaps worth while 
indicating that, although the largest moral terms are 
used in justifying the jurisdiction of arbitral tribunals, 
the rationale of most arbitral decisions is likely to be 
convenience or expedition rather than a nice adjust- 
ment of moral claims. 

2. Cf. Eddy, Arthur Jerome, The New Competition 
(Chicago, 1920), especially pp. 58-104. For an attempt 
to restrain the competitive impulse by religious con- 
siderations, cf. Competition, a series of essays by five 
Anglican Churchmen, London, 1917. 

3. Monopoly as a governmental institution is very 
old. It was practiced by the Greek communities 
(Aristotle, Politics, I, 4, 6, 1259 a); and was a particular 
mark of the Ptolemaic organization, which became so 
much of a model for the later imperial system. Cf. 
The Revenue Laws of Philadelphus (1896), with B. 
Grenf ell's full commentary; U. Wilcken, in Mitteis- 
Wilcken, Grundzuge der Papyruskunde, I, pp. 239-58, 

NOTES 141 

and K. Riezler, Uber Finanzen und Monopole im alien 
Griechenland (1907). For the hatred of monopoly in 
England after the Reformation, cf. the already quoted 
essay of H. G. Wood, "The Influence of the Reforma- 
tion," etc., in Property (1915), pp. 146-49. Cf. also, 
Maurice Dobb, Capitalist Enterprise and Social Prog- 
ress (London, 1925), pp. 97-113, 143-77, and for the 
medieval monopoly, pp. 204-21, 298-303. 

4. The law regulating unfair competition has been 
made the subject of a special statute in Germany a 
statute which has been largely used as a model for 
similar legislation elsewhere. The German law of May 
27, 1896, was treated as creating a group of special 
cases of tort which the later and general section of the 
BGB, 826, somewhat enlarged. There are many 
commentaries, of which two may be mentioned: 
Wassermann, M., Der unlautere Wettbewerb (ist ed., 
1907), and Finger, Chr., Kommentar zum Wettbewerb- 
gesetz. (2nd. ed , 1907). The later editions of these 
books, in 1911 and 1910, respectively, deal with a later 
statute, the law of June 7, 1909, which attempts a 
general definition. Cf. Kuhn, E. F., Das Gesetz gegen 
den unlauteren Wettbewerb vom 7 Juni, 1901 (Mann- 
heim, 1911), and Reusch, G., Die 823, 824-26, BGB 
und die Gesetze gegen den unl. Wettb. (Gottingen, 1916). 

In France, a complete system of protection against 
unfair competition had long been derived from the 
general tort sections of the Code Civil, 1382-83, under 
which a distinction was attempted between concurrence 

14* NOTES 

illicite and concurrence deloyale. Thaller, E., Traite de 
Droit Com., 95. Similarly, in Switzerland (except in 
some cantons), Belgium, Holland, and Italy, the Civil 
Codes seemed adequate without a special statute. Cf. 
the treatise of Pouillet, Traite dcs Marques de Fabrique 
et de la Con. Del. (Paris, 1906); Di Franco, Trattato di 
concorrenza shale (Torino, 1907). A brief history of the 
subject and a comparison with English law is given in 
an Erlangen dissertation (1928), Die englische Recht- 
sprechung zur Bekampfungj etc., by K. S. Schmidt. 

5. It is for that reason that I shall omit in this dis- 
cussion the many cases of libel and slander and of 
inducing breach of contract, which are specially 
examined in all treatises and statutes on unfair compe- 
tition. The violation of trade secrets, on which there is 
a large literature, might more properly come within this 
chapter. It is omitted merely because of its patent 
immorality and illegality. 

6. Mitchel v. Reynolds (1711), i P. Williams, 181, I 
Smith's Leading Cases (i2th ed.), p. 458. 

7. L.R. 23, Q.B.D. 598. 

8. Am. Bank Co. v. Fed. Res. Bank, 256 U.S. 


9. Tuttle v. Buck, 107 Minn. 145. 

10. Bcardesly v. Kilmer, 236 N.Y. 80. 

11. Dunshee v. Standard Oil Co. (1911), 152 Iowa 
624, 132 N.W. 371. 

12. Boggs v. Duncan-Shell Furniture Co. (1913), 163 
Iowa 115, 143 N.W. 482. 

NOTES 143 

13. The history of the entire subject is set forth in 
the excellent book of Dr. Frank I. Schechter, The 
Historical Foundations of the Law Relating to Trade- 
Marks (New York, 1925). Dr. Schechter is concerned 
primarily with the English development. The rela- 
tively recent character of the protection for Dr. 
Schechter makes clear that the Elizabethan case of 
Southern v. How was not properly a trademark case 
(pp. 5-10) may be compared with an equally slow 
growth of the idea of industrial property elsewhere. 

14. 15 R. II, c. 10 (Stat. of Realm, ii, p. 81), quoted 
in Schechter, op. cit., p. 82. 

15. H. T. Riley, Mem. of London and London Life, 
p. 1 1 8; Schechter, op. cit., p. 46. 

16. Acts of Privy Council, N.S. xxii, 1591-92, pp. 
406-07; Schechter, op. cit., pp. 87-88. To the instances 
there given from England and the Continent one may 
add the emphatic words of the Statuta mercatorum of 
Rome (i4th century); Gatti, Statuti dei mercanti di 
Roma, p. 135; and the Statuta of Florence of 1415, III, 


17. Schechter, Frank, "The Rational Basis of Trade- 
Mark Protection," 40 Harv. L. Rev., 803. For the 
innumerable discussions abroad on this subject we may 
note the book of Kohler, Josef, Warenzeichenrecht (1910) ; 
Eismann, B. K., Die Rechtsnatitr des Warenzeichenrechts 
(Erlangen diss.), 1913. 

1 8. Chase, Stuart, The Tragedy of Waste (1925), and 
Your Money's Worth (New York, 1928), in collabora- 

144 NOTES 

tion with F. J. Schlink. Cf. also The New Republic, 
vol. 44, pp. 100, 126, 179, 183. 

19. Mayor of Colchester v. Goodwin (1664), Carter, 
114, 120. 

20. Blanchard v. Hill, 2 Atkyns, 487. 


1. Mr. Maurice Dobb in his book, Capitalist Enter- 
prise and Social Progress (London), gives us an excellent 
analysis, thoroughly documented historically, of the 
tendencies in modern industry. 

2. Giles, H. A., History of Chinese Literature, pp. 
147-49. A fuller extract appears in Mr. Giles's Gems 
of Chinese Literature (2nd ed., 1923), I, 251-56. 

3. Smith, Adam, Theory of Moral Sentiments (ist 
ed.), pp. 290 seq.